January 15, 2004
2:00 pm PST

Members in Attendance:

• Clayton Agena / HI
• James Bank / MT
• Darlene Bramon / ID
• Skip Eshelman / WY
• Chris Forzano / WA
• Gregory Maciulla / AZ
• Joe Reder / WA
• Virginia Symonds / OR
• Bruce Twomley / AK
• Sherry Whah / AK
• Tom Sherwood / Designated Federal Official

Members Absent:

• Mario Burgos / NM
• Sharon Stetz / UT
• Larry Barnard / ID

TAP Staff:

• Judi Nicholas
• Anne Gruber

Guests:

• Bernie Coston, TAP Director

Opening

Sherry Whah opened the meeting at 2:00 o'clock. Sherry welcomed everyone and reviewed the agenda. Sherry asked if there were any other items to be included. Since Bernie Coston was on the call, he was asked to speak to the group.

Roll Call
Anne Gruber took the roll call.

BERNIE COSTON
Bernie first wanted to thank the members for their time. He then talked about the National Taxpayer Advocate's Report To Congress, with its #1 problem this year being the Alternative Minimum Tax (AMT). He talked about recruitment, then opened up the discussion for questions. Joe Reder asked about retention of current TAP members during the next recruitment. Bernie will respond in a couple of weeks with the status of the current TAP members. Bruce asked about advertising Taxpayer Advocate Service (TAS).

Responses
The joint committee had recently received some responses to several issues that we elevated. The IRS response regarding several OIC suggestions was favorable and they plan to initiate the changes with the next revision of the Form 656, Offer in Compromise.

Darlene asked for an update on the effectiveness of the two centralized OIC call sites. Neither Judi nor Tom had any information on this, however Tom said most offers were not accepted. Almost half of all offers are returned as unprocessable. Unprocessable is merely a statement about the completeness of the forms and whether the taxpayer submitting the OIC is in bankruptcy or in full compliance with filing all tax forms for which he or she is liable. James Banks suggested a decision tree be added to the Form 656. Judi suggested we do some research first and maybe create a decision tree. Tom interjected that he is reviewing the draft Form 656 and instructions. It is set up in a decision tree type format, whereby the form calls for taxpayers to make decisions, and based on their answers, they could stop and not proceed. The new form gives thorough guidance on what is required to make a viable offer. Darlene asked for clarification and if the TAS would help a taxpayer fill out the forms. Tom said yes with certain qualifications, but TAS would prefer taxpayers work with the function involved first. Greg had an article with statistics showing 56% of offers were accepted in 6 months, and another 28% in 9 months. Tom said numbers are good, but could be better on front end of processing. Greg asked for clarification of what it takes for a case to go to TAS. Tom reviewed TAS criteria. Bruce reviewed the status of his proposal on taxpayer rights.

Also the joint committee sent us copies of the information that they have elevated to the IRS regarding the W-4 form and taxpayer rights.

Two issues were brought back to the area committee for more work. One, the proposal for a PTIN for childcare providers requires that the regulations be changed. Judi stated that issues of a legislative nature must be forwarded to the National Taxpayer Advocate rather than the committee formulating the regulations. Jim asked why not just tell the providers to get an EIN, Sherry explained that form is confusing and is often rejected by the IRS if no employees are anticipated. Judi asked if there are other occupations that might need a special identification number. Rather than go the legislative route, we could find out what the IRS processing instructions are and analyze why the forms are rejected. Armed with that information the committee might be able to make a recommendation for procedural changes. Judi indicated that the staff will do some research into why the EIN requests were rejected and perhaps arrange for an IRS staffer to talk with the committee about the EIN process.  ACTION ITEM: Anne will research the EIN process for the next meeting.

Another returned issue was the delinquent return issue whereby the taxpayer sent in several tax returns, some with balance due and some with refunds. IRS refunded some funds to the taxpayer, then sent her collection notices on the balances due. The IRS only considers one year at a time and appears to consider refund returns first. Yet people only do what they are asked for. Greg wants to find out the joint committee's track record and see what issues they have advanced. Their annual report lists everything, what was accepted and what was not. Greg asked Tom, as Local Taxpayer Advocate, what he would do if Sherry's client came to him. Sherry explained the Currently Not Collectible status. Tom agreed that the taxpayer received and cashed the refund, therefore, TAS would address the collection issues. In this case, it sounds like the taxpayer could not pay, therefore IRS put them into a suspended pay status which would be reviewed by IRS annually. Bruce and Sherry will rework the issue.

Referrals

Alaska, Request for tax returns by IRS, #2496
Sherry explained her area of interest involving notices that are sent out to taxpayers advising them of a tax return that is over due. The notice tells the taxpayer they need to file a return but does not mention all unfiled years. For example; a taxpayer is advised that the tax year 2001 needs to be filed, but the notice does not mention the other five years that have not been filed.  Why can't the IRS notice mention other years?

Only work one year at a time, Sherry wants a speaker to address the problem. ACTION ITEM: Anne will ask the non-filer program if they could recommend a speaker for next meeting.

Idaho, Universal POA form, #1595
Darlene reported that the ball is in the attorneys' court and they just don't have time these days to work on the idea. Tom Travers talked to the attorneys. We will park this issue till a later date and periodically ask about it..

Montana, Employee Benefits, #2527
Jim wrote exactly what he wanted to and felt that he said it all in the referral.  We have sent an email to the form W-2 owner. Jim suggests that we just wait for an IRS response.

Washington, Internet theft, #2580
Joe is not sure where we are going with this but there are many incidents when someone loses over $10,000 in an Internet auction, according to the FBI web site. But as far as the question about the $3,000 Capital Gain limit, Jim said that this is definitely a Sch A item. There are certain limitations and restrictions with the current IRS Sch A loss, but a taxpayer can take a loss all in one year. Joe said to close case. He would contact the taxpayer who brought the matter to his attention.

Around the Area
Sherry gave the members the opportunity to share their outreach activities since the last meeting.

• Clayton Agena, Hawaii, nothing.
• James Banks, Montana, met 30 H&R Block preparers.
• Darlene Bramon, Idaho, has been doing one on one outreach.
• Skip Eshelman, Wyoming, is still struggling with his TAS office. Next week he will give a talk about search and rescue.
• Chris Forzano, Washington, met with the Sons of Italy.
• Gregory Maciulla, Arizona, still working on financial literacy. Working with SPEC.
• Joe Reder, Washington, busy working on EITC Committee.
• Virginia Symonds, Oregon, met with her TAS office yesterday and together they visited all the IRS offices.
• Bruce Twomley, Alaska, had one contact with a practitioner who had trouble with his  OIC, but TAS helped ands everything is okay now. Bruce then asked if anybody had heard about lay offs at the IRS.
• Sherry Whah, Alaska, spent 30 minutes talking to 100 practitioners and taught a class where she mentioned TAP.

Closing
The third Monday in February is a holiday, so the monthly teleconference is moved to February 23, 2004.

Tom adjourned the meeting. 

NEXT TELECONFERENCE: February 23, 2004 2:00 pm PST.