January 11, 2003

The TAP members for the SB/SE Payroll Issue Committee met in person on Saturday, January 11, 2003 in New Orleans, LA.

Members in Attendance:

• Jim Abraham
• Agena Clayton
• Denise Bigger
• Norma Bishop
• Charlotte Cassady
• Thad Davis
• Justin Doucette
• William Gedge
• Keith Johnson
• David Meyer
• Theodore Perros
• Nancy Quarles
• Charles Silva
• Leonard Steinberg
• Steven Wood
• Frank Woods
  
   
• DFO: Mary O'Brien
• IRS Program Owner: Margie Kinney
• TAP Analyst: Mary Ann Delzer

Roll call was taken and minutes from 12/3/2002 approved as corrected.

Welcome and Announcements
Steinberg welcomed those panel members who were unable to participate at the Orientation meeting; Agena, Gedge, Meyer, Quarles and Woods.

Steinberg led a discussion on the appropriate length for the committee's conference call. Calls should be limited to one hour, with the chair monitoring the time and the agenda. If additional time is required, the committee should be polled before the call goes beyond the one hour mark.

Election of Chair and Vice-Chair
After a brief discussion, a consensus decision was made with leadership to continue under Steinberg as Chair and Bishop to assist as Vice-Chair.

Issue Committee Business

Definition of a Small Business
Steinberg began the discussion by looking for a definition of "small business." Many factors could be considered; total assets, revenue, number of employees. Kinney stated that a definition will help determine the data required and help to target the audience for which the committees recommendations will assist. Bishop recommended that the committee follow the guide of Congress and the Small Business Paperwork Relief Act which uses a definition of 25 employees or less. Abraham questioned the situation where a small business may have a large turnover of employees. Johnson shared that in the health insurance industry the standard is 50 employees or less. Doucette reiterated that the presumption could be made that Congress did the research and 25 employees or less is appropriate. Silva expressed his concerns about the employers use part-time help the majority of the time. Kinney stated that the time/burden of employment tax is the same for each employee regardless of the hours they work or their time employed by small business.

Definition agreed on for the committee is that a small business is one with 25 or less employees per reporting period for payroll taxes.

Procedural Issues
Steinberg asked questioned the appropriate way to request additional information/research. O'Brien stated that all requests should go through her, with copies to Kinney and Delzer. If teleconferences are needed, they can be scheduled by O'Brien for committee members. Phone cards will allow members to set up calls as well. O'Brien requested that she be informed about conference calls that are scheduled. This way if members need the call-in information, the office will have it.

O'Brien also let the members know that "TAP Speak" will be up and running soon. TAP Speak will offer threaded messaging, a reading room, discussion and calendar. It is hoped that TAP Speak will enhance communication between the members of the panel.

Steinberg began a discussion about future meeting planning. It was decided to schedule a monthly conference call on the first Thursday of the month at 3:00 p.m. ET. Therefore the dates would be 2/6, 3/6, 4/3, 5/1, 6/5, 7/3, 8/7, 9/4. Members should reserve these days/times and I anticipation of a teleconference meeting.

O'Brien shared that when planning face-to-face meetings, committees should consider using a host city, a city in which one of the members live, to reduce travel costs. If another face-to-face meeting is wanted, a business case must be made to support the cost.

ACTION: O'Brien will send out the Tax Forum schedule with dates/cities, as it comes available.

Taxpayer Education and Communication (TEC) Presentation
TEC Territory manager in Louisiana, Phyllis Distefano, gave a presentation on the initiatives of the TEC program. TEC's mission is to educate small business/self-employed taxpayers understand their tax responsibilities. In regard to employment tax, TEC goals include improving compliance by reducing the burden on employers in filing, reporting and paying. Because of the increased accuracy of filing/deposits with the use of electronic filing/Electronic Federal Tax Payment System (EFTPS), initiatives are being worked to encourage employers to use these systems. TEC helps facilitate new business seminars with the help of tax professional groups, to educate new employers. A CD ROM is also developed each year to answer the questions new businesses have.

ACTION: O'Brien will order the CD ROMs available to small business for the panel members.

Sub-Committee Reports

1. Taxpayer Opinion- Reporting
2. Taxpayer Opinion- Deposits
3. Federal and State

See the attached reports form each committee.

Next Steps
Silva shared his concern that employers do not understand their fiduciary responsibility. He stated that all the forms and publications should include a statement that taxes withheld are not the employer's funds and upon withholding these funds they are the funds of the Treasury and employers hold the funds in a fiduciary capacity. Employers need to understand that they have an obligation to pay the government on a timely basis. Meyer agreed that the IRS should make it clearer that the funds are held in trust for the United Sates government. Kinney recommended that the committee test this assumption that employers do not really understand the fiduciary responsibility. If the committee finds this to be true, this should be included in committees' recommendations. The committee agreed that this issue is something to be included in the final report to the IRS.

Next Scheduled meeting:
Teleconference on February 6, 2003, 3:00 p.m. ET.