Area 5 Committee Meeting Minutes

July 12, 2004

Present:

• Linda Bader
• Lydia Brasch
• Patrick Castleberry
• Laura DeMarais
• Maria Herman
• Steve Landauer
• Tom Seuntjens
• Jeana Warren
• Nan Wilson
• Frank Woods, Jr.

Absent:

• John Hollingsworth
• Lillian Woo

Staff:

• Mary Ann Delzer, Program Analyst/DFO
• Audrey Jenkins, Program Analyst
• Patti Robb, Note Taker

Guests:

• Steve Bankler
• Ken Eichner

Welcome/Announcements/Review Agenda
Lillian will not be on the call today so Pat Castleberry is acting as Chair. Castleberry opened the meeting and welcomed everyone.

Roll Call
Quorum met.

Review/Approve Minutes
June 14, 2004, minutes were approved as submitted.

Discussion of Issues

• Address Change — DeMarais
  Nothing new this month.
• E-File for VITA/TCE — DeMarais
  Nothing new this month.
• Individual E-Filing — Hollingsworth
  Seuntjens said they were working on setting up the next subcommittee meeting for the end of July.
• ID Theft Impact on IRS — Bader - See Attachment One
  Bader presented a referral for the Joint Committee. The IRS has formed a committee to address this issue. Nothing was done system-wide before and this IRS committee will ensure it is system-wide. They will be determining what will be valid proof of identification. TAP members will be represented by TAS as far as input to the committee when formatting their proposals. There was a motion that the Area 5 report be issued to the Joint Committee — it was seconded and approved by all. Seuntjens asked what divisions are included in the new IRS committee. Bader responded that every division is represented. Delzer said the report will be elevated to Nina Olson, National Taxpayer Advocate. TAS (Christopher Lee and Pamara Blount) will include TAP’s input with TAS input when working with the IRS committee.
• Copies of Return/Transcript — Warren
  Nothing new this month.
• Personnel/Training — Landauer
  DFO Glass and TAP Manager McQuin are getting more information. Jenkins will contact Landauer after this meeting to discuss. Castleberry suggested Landauer ask for an informal copy of the IRS survey.
• Special Report — Seuntjens
  Observation of Testing Forms and Pubs — Seuntjens observed two groups testing the proposed 1040S for seniors. The form testing process is very beneficial. The IRS has an outside firm to the testing. TAP should participate as much as possible.

New Issues
See Attachment Two

Castleberry said OIC was near and dear to him. The IRS is getting so rigid — “one size fits all.” Would like to take this on as an Area 5 issue. Delzer stated that this is the number one issue in the NTA FY 2005 objectives report. The report is not available in hard copy yet so she will send out the link. You will probably want to look at the report before you decide to work this issue.
ACTION: Delzer will send link to for the NTA FY 2005 Objectives Report.
ACTION: Castleberry will review the report and will report back in August. If the NTA is hitting all areas, Area 5 may not want to work.
Landauer noted that there is written guidance to the new OIC form. Are they considering testing the new form?
ACTION: Jenkins will check to see if the new OIC form is going to be tested.

Outreach Report
Bader — met with Senator James Talent of Missouri. They talked about AMT. She told him about TAP and he was very receptive. They also discussed a LITC for the St. Louis area.
Castleberry — received calls from practitioners in Oklahoma City. They feel the OIC system has completely broken down.
Hermann-Pariente — will be meeting with SBSE marketing people in El Paso on August 18.
Landauer — met with a local congressman about EIC issues.
Seuntjens — DeMarais and I are attending the Tax Forum in Minneapolis. McQuin will be there too. I will be interviewing perspective panel members in Washington, D.C., for two days.
Warren — will be interviewing perspective panel members in Dallas this week.
Castleberry, Bader and Landauer will be attending the Oversight Board meeting on July 26 in Kansas City. They will forward comments to the committee.

Next Meeting: Face-to-Face Meeting in Minneapolis, August 23-24, 2004
Working on the agenda right now. Topics identified are communications strategy, annual assessment, possible speakers. Jenkins did a press release.

Remember that the staff is very busy supporting recruitment and interviews, so please be patient.

The meeting is set for August 23-24, 2004, at the Country Inn & Suites Mall of America, 2221 Killebrew Drive, Bloomington, MN 55425. Travel day August 22, and return home the afternoon of August 24.

Public Comment
Ken Eichner – is happy to hear about OIC being the number one issue in the NTA Report . Feels the new Form 656 is obsolete already. Please forward the Minneapolis hotel information to him. Asked Castleberry to request a vote to work the OIC issue.
ACTION: Delzer will send a copy of the press release out to all the committee members.

Steve Bankler – spoke to Quentin Smith, with TEC. They are starting a matching program of 1099’s with Schedule C and F. And for your information, the IRS has hired a contractor to survey taxpayers who have gone through Appeals. Would also like the hotel information for the Minneapolis meeting.

Closing
Meeting adjourned.

Joint Committee Issue Referral Form

TAP Committee: Area 5
TAP Database Number:
Short Description: Identity Theft: a growing problem for the Internal Revenue Service and individual taxpayers
Date Approved by Committee:

Members of Subcommittee/Author(s): Linda Bader and Lillian Woo

Statement of Issue: Identity theft as a national problem has proliferated exponentially as it affects individuals, private industries, and governments at all levels. Identity theft is growing into a service wide problem for the Internal Revenue Service and taxpayers. The cost in dollars and time is monumental.

Background: Identity theft has been referred to as a growing industry. The Federal Trade Commission found that the 7 million new victims in 2003 will spend an average of 175 hours and approximately $1,000 to fix their credit. Much of this time and money is spent in rectifying problems with the Internal Revenue Service. FTC reported businesses lost $47.6 billion due to identity theft in 2002 and this loss has an effect on their taxes.

Analysis of Issue: At the present time IRS does not have a service wide Identity theft policy. 1.There are no uniform guidelines for acceptable documentation to prove identity theft. 2.There is no uniform procedure to categorize information about identity theft or to establish a master file of statistics by demographic data. The IRS has established a task force to address direct and tangential problems caused by identity theft. All operating divisions are represented on this task force. The task force is headed by Jack Holstein. The National Taxpayer Advocate’s office is represented by Pamara Blount , Local Taxpayer Advocate-Michigan, and Christopher Lee, Attorney Advisor to TAS.

Methodology/Supporting Data: A teleconference with Pamara Blount, Local Taxpayer Advocate — Michigan, Christopher Lee, Attorney Advisor to TAS, Sandy McQuin, Area 5 TAP manager, Audrey Jenkins, Area 5 program analyst and Linda Bader, Area 5 TAP member, established that a task force had been formed to study identity theft within IRS. Examination of material supplied by Federal Trade Commission, U.S. Postal Inspection, Federal Reserve Bank, National Association of Credit Unions, Social Security Administration, U.S. Department of Treasury, Internal Revenue Service and many Area 5 staff members, provided much helpful information.

Barriers to Approval: Without working with local law enforcement agencies for some kind of valid proof, the IRS might have a hard time identifying if a taxpayer is a victim of identity theft. The issue of identity theft is very complex, involving different government agencies, such as Social Security Administration and Internal Revenue Service. A high percentage of the identity theft cases involve theft of social security numbers. While there are federal laws that govern confidentiality, there is at present no uniform federal government policy to deal with identity theft per se. Federal agencies have responded to identity theft individually, resulting in regulations and attempts at policies that address a specific agency’s concerns rather than general government concerns. Lack of cooperation between government agencies could be a barrier to establish an effective identity theft policy.

Proposed Solution: Pamara Blount and Christopher Lee, the NTA’s representatives on the IRS task force on identity theft, feel that TAP members input would be beneficial to the development of an IRS identity theft policy. It is, therefore, recommended that the NTA representatives on this task force request input from TAP members in the development of the identity theft policies to be recommended to IRS.

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Contact History Report for Area 5
Tuesday, July 06, 2004

Contact ID: 1525
Case # 1567
Title: OIC Procedures
Date of Contact: 4/7/2003
Source: Web Comment
State: TX
Area: 5
Status: Parking Lot
Status Date:
Primary Category: Offers in Compromise
Secondary Category: Process
Brief Description of
I represent tax clients before the IRS. I have stopped using the Offer in Compromise program. The national standards for food, housing, etc. are too stringent and provide little relief. The Internal Revenue Code provides that IRS employees are not bound by the standards in determining the validity of the offer and can take into account special circumstances. I have yet to have one IRS employee consider anything a special circumstance. In my opinion, the offer program is a one size fits all. That is not the way taxpayers are in real life. In addition, the appeals function is now using appeals officers with revenue officer backgrounds and work experience. I have found that these individuals have a very difficult time adjusting their thinking to the Appeals Mission.
Issue
Taxpayer thinks that the OIC Program is a one size fits all system. Taxpayer believes that each case should be looked at on an individual basis instead of holding everyone to the same standards.

Contact ID: 2381
Case # 2380
Title: Audit Process
Date of Contact: 10/10/2003
Source: Toll Free
State: TX
Area: 5
Status: New
Status Date:
Primary Category: Audits
Secondary Category: Process
Brief Description of
I know a number of CPAs that are upset with IRS audit for their procedures and taxpayers who feel lost and defeated at the beginning of the situation. IRS claims to have audited the client before it has even asked for data and the taxpayers are presented with an agreement letter and bill. These actions would not be necessary if the taxpayer would be asked for info first. My client filed electronically so we were not able to attach items to return. He tries to tithe and had the church contribution letter. This was all that IRS audit needed. The "audit" letter in effect said that IRS believed him a liar and did not apologize when his return was put back as filed. Another taxpayer was audited on tip income. IRS used erroneous info against this honest, low income citizen who kept detailed records. She was so confused by the procedure, that she left her records at IRS. But the auditor chose to ignore the records in favor of statistical amounts. The manager, when confronted agreed that taxpayer's records were sufficient to close the file as no change. Common citizens do not understand how to protect themselves without help from this abuse. Time savings in light of budget is no excuse.

Contact ID: 2559
Case # 2564
Title: OIC Procedures
Date of Contact: 1/5/2004
Source: Toll Free
State: MN
Area: 5
Status: Parking Lot
Status Date:
Primary Category: Offers in Compromise
Secondary Category: Process
Brief Description of
Offer in Compromise (OIC) Program service "still needs improvement" according to this citizen. Citizen suggests that the IRS employees "look at the information that is submitted to them in the original package before requesting additional information." In this citizen's experience, time was wasted in her having to re-submit the data that was already submitted in the first place and as a result her offer was rejected and now she has to start all over again.
Issue
Taxpayer feels that correspondence procedures should improve. Taxpayers are constantly having to resubmit items previously submitted because items in the original packages are not acknowledged.

Contact ID: 2634
Case #
Title: Telefile Improvements
Date of Contact: 1/27/2004
Source: Toll Free
State: NE
Area: 5
Status: Parking Lot
Status Date: 6 /14/2004
Primary Category: Return Processing
Secondary Category: Other
Brief Description of
Caller was doing taxes using Telefile. He apparently missed one of the questions. He tried to back up to read the question when prompted for the answer but the system would not let him. He said he had hoped to get a direct deposit refund, but since he couldn't go back, will now be waiting for an old fashioned paper refund. There should be some way to back up in the system.
Issue
Telefile improvements should be made to enhance the system. For example; taxpayer needs option to back-up to make corrections.

Contact ID: 2712
Case #
Title: TAC Wait time
Date of Contact: 2/13/2004
Source: Toll Free
State: TX
Area: 5
Status: Parking Lot
Status Date: 6 /14/2004
Primary Category: Taxpayer Assistance Centers
Secondary Category: Service
Brief Description of
Caller called from cell phone while in Taxpayer Assistance Center in Downtown Dallas. There was only one window open and one employee was both preparing tax returns and providing tax assistance. Caller had been waiting 2 and a half hours and was concerned that she would have to leave without having received assistance since she another appointment. Caller assumed other employees were at lunch but when she asked the one employee when her coworkers would be back from lunch, the reply was she had no control over that.
Issue
Caller had been waiting 2 and a half hours and was concerned that she would have to leave without having received assistance since she another appointment.

Contact ID: 2800
Case #
Title: Improve: Timeframe Related to Contact Numbers
Date of Contact: 3/3/2004
Source: Toll Free
State: MO
Area: 5
Status: Parking Lot
Status Date: 6 /14/2004
Primary Category: Return Processing
Secondary Category: Quality
Brief Description of
Caller prepared paper return claiming the child tax credit (CTC) and EITC. She did not do the worksheet and subtract the $400.00 refund she received from the CTC. She called the refund tax line to find out why she hadn't received her refund. Was told problem processing return call this number 1-800-829-0582 EXT 462. So she called the number/ waited on hold for over a half hour. This return is delayed because of the backlog in processing math errors for the thousands of persons who did not compute credit correctly. Since the return is still in processing, IRS employee answering the 0582 number had no additional information and wasted his time plus taxpayer's time in answering the phone. Caller's suggestion don't bother giving out a phone number to call and set up false expectations when no additional information is available, give a time frame of when to call back.
Issue
The IRS should not give taxpayers a phone number to call when at the time there is no information available. Taxpayer should be informed of the time frame of when to call back and account information will be available.

Contact ID: 3079
Case #
Title: Form W-9 Improvements
Date of Contact: 6/16/2004
Source: Web Comment
State: ND
Area: 5
Status: New
Status Date: 6 /16/2004
Primary Category: Forms, Instructions, and Publications
Secondary Category: Business Tax
Brief Description of
I am very displeased with the fact that the IRS allows the W-9 to be used as a method of collecting a taxpayer's name and TIN. My concern relates to the $50 penalty the IRS charges when a 1099 is issued and the name and TIN don't match. My belief is that the majority of individuals who fill out the W-9 don't know how important it is for the name to match the TIN, or worse they probably don t even know the correct name of the company because the company is using a DBA and the secretary who fills out the form has never seen the CP 575 form which contains the entities proper name and TIN.

My solution to this problem is so simple it angers me to even have to take the time to write it down.

When a company requests a TIN, the IRS issues a confirmation form back telling them what their TIN is. In my case it was CP 575. Instead of allowing the use of the W-9, to collect the name and TIN, Why not REQUIRE all business's to obtain a copy of the entities CP 575. This would guarantee that the name and the number the IRS has is the exact same name and number companies would use when issuing 1099's.

If I screw up and enter the wrong data in my system, you would be justified in charging the $50 fine. As it is, every year I send out hundreds of letters notifying companies and individuals that the name and TIN they gave me does not match the IRS. I request updated information and include a copy of the W-9 form. If I do get one back it often times has the same name and number I had on the previous W-9.

I would venture to guess that most business don t even know where their CP 575 form is. This is because no one has ever asked them for it. If every time they did business with another firm they were asked for a copy they would make sure to have it available.

The W-9 form itself and the fact that you allow for the use of a substitute W-9 form is a terrible idea. Has anyone from the IRS ever read the instructions on the W-9. Are you aware that the instructions specifically identify that in most cases the form is not required to be signed by anyone. The instructions also include this absurd language: "Enter your Business name as shown on required Federal tax documents on the "Name" Line. This name SHOULD match the name shown on the charter or other legal document creating the company." NO NONO. SHOULD, who put SHOULD in here. It should say "MUST". Further more why be so vague about what the name should match. Tell them it must match the CP 575 or what ever form the IRS used to confirm their TIN.

If you can identify a reason why this simple solution would not work I would be very interested in hearing about it.
Issue
Taxpayer believes that the majority of individuals who fill out the W-9 don't know how important it is for the name to match the TIN. Instead of allowing the use of the W-9, to collect the name and TIN, Why not REQUIRE all business's to obtain a copy of the entities CP 575. This would guarantee that the name and the number the IRS has is the exact same name and number companies would use when issuing 1099's.

Contact ID: 3116
Case #
Title: E-File-Taxpayer Burden Reduction
Date of Contact: 6/24/2004
Source: Other
State: TX
Area: 5
Status: New
Status Date: 6 /24/2004
Primary Category: E-File
Secondary Category: Individuals
Brief Description of
A great move for taxpayer burden reduction — Form 1040S. However, because of the mandate to e-file, what good does a simpler form do? By making a simpler form, the IRS will be discouraging e-filing. Somebody needs to rethink the e-filing mandate. I still think that the taxpayer's tax return filing burden reduction still needs to be measured against the cost of a stamp.
Issue
Taxpayer thinks the taxpayer's tax return filing burden reduction should be revisited.

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