SBSE Issue Committee Meeting Minutes

March 3, 2005

Opening of the Meeting
Nagel opened the meeting and welcomed all the members. He announced that Knispel would not be able to join the meeting and Audrey Jenkins will be taking minutes instead.

Roll Call

Panel Members Attending

• Margaret Balcom, Concord, CA
• Aaron Bell, Kenmore, NY
• Bill Bly, Wayne, PA
• Paul Brubaker, York, PA
• Charlotte Cassady, Talbotton, GA
• Paul Duquette, Amherst, WI
• Robert Forst, Encino, CA
• Donna Hafer, Burlington, KY
• Edward Hanna, Tampa, FL
• Steven Hoffman, Columbus, OH
• Bradley Moore, Decatur, GA
• Paul Nagel, Glen Cove, NY, Chair
• Owen Oatley, Holly Hill, FL
• Sallie Richardson, Taylorsville, UT
• William White, St. Joseph, MO

Absent

• Stanley Miller, St. Louis, MO
• Howard Perkins, Suisun City, CA
• Steve Rue, Mechanicsville, VA
• Mary Suther, Dallas, TX

Quorum was met.

TAP and IRS Attendees

• Helene Bayder, SB/SE Program Owner
• Michael Chessman, TAP SBSE Liaison
• Audrey Jenkins, TAP Analyst
• Meglan Knights, Analyst, Office of Taxpayer Burden Reduction
• Sandra Ramirez, Designated Federal Official (DFO)
• Kathy J. Welsh, SBSE Program Analyst

Program Owner Presentation
Knights thanked both Subcommittee #1 and #2 for their participation and comments on the issue of extensions. She requested that Subcommittee #2 provide her with a written outline of their recommendations on the issue of filing extensions for businesses (as Subcommittee #1 has done) to assist her in following up with the subject matter experts. Knights began by briefing the Committee on the recommendations made by the Subcommittee #1 on the issue of modifying Form 4868. The recommendations and the IRS responses to these are as follows: 1) The Subcommittee recommended incorporating the “Specific Instructions” currently found on page 3 on page 1 of the Form 4868 instructions where blank space was available. The IRS’ Forms & Publications prefers keeping the information on e-filing and e-paying with the extension on page 1 and thus, there is no space available to make the change, 2) The Subcommittee also recommended providing specific wording to describe the length of time given with the extension on the title of Form 4868. The Forms & Publications department agreed to highlight the description of the length of time given with the extension on the Form 4868 instructions rather than changing the title. 3) Another recommendation made was including new wording to define the extension given to taxpayers who are “out of the country” found on line 8 of the Form. Forms & Publications believes it would be best keeping the explanation as part of the Form’s instructions. A firm decision was not made yet. 4) The Subcommittee also recommended allowing the filing of the individual extension via the IRS website. The IRS’s Electronic Tax Administration did not agree with this recommendation and thus, filing the extension will continue via paper with the Form 4868 or by e-filing the extension using a paid tax preparer.

Subcommittee #1 Chair Brubaker made some additional comments on the recommendations made by this Subcommittee. He indicated that one concern is the fact that when taxpayers download the extension Form 4868 using the IRS website, they only tend to use the first page (Form 4868) and disregard the instructions to the Form. The Subcommittee members suggested that since the new draft of the Form 4868 will exclude the tele-file information, the blank space left on the front page of the Form could be the opportunity to include instructions essential when filing for an extension.

In response to Subcommittee #1’s comments and their recommendation on filing Form 4868 electronically, Chessman clarified that decisions on electronic filing are not made by the SBSE organization but by the Electronic Filing Administration (ETA). The SBSE has no jurisdiction on decisions made by the latter.

Another issue discussed by the Subcommittee #1, Hafer added, was that of a taxpayer receiving confirmation when filing for the extension of time to file. Currently, only taxpayers who make a tax payment with a credit card can receive this confirmation on applying for extensions and Hafer believes that the options should be given to others.

Brubaker asked the Program Owner whether it would be possible for the members of this Subcommittee to participate and be updated on the Project’s progress in modifying Form 4868. Bayder and Chessman agreed to keep the Subcommittee updated.

The Subcommittee #1’s report concluded with Knights indicating that the members have completed their task. Knights thanked the members again.

Knights continued by reporting on the recommendations and comments made by the Subcommittee #2 whose members had a teleconference to discuss the issue of the filing extensions for businesses. The main issue for this Subcommittee, Knights said, was Form 7004 however; the members were also concerned with the extension of time to file partnership tax returns. Oatley elaborated on the issue of concern regarding the partnerships’ extension to file. The main issue in establishing the length of this extension is the effect on the partners’ receiving their Schedule K-1 timely in order to file their individual tax return by October 15th. This concern is a barrier to the IRS’s aim of creating uniformity with extensions to file business tax returns and a barrier in finding simplicity in the process, Oatley said. Bayder and Chessman agreed. Both concluded that Subcommittee #2’s work on the assigned issues is complete and thanked the members.

Welsh had recently participated with the members of Subcommittee #3 in a preliminary teleconference to discuss Form 944. Jenkins has arranged another teleconference on March 28th at 11:00 AM ET.

Duquette, the elected chair of Subcommittee #3, reported that their first teleconference was to discuss housekeeping issues such as chair selection and date and time of the Subcommittee’s future teleconferences. Even though they briefly discussed the Form 944, they had many questions arising from their spirited discussion. Questions, for instance, related to line 7a and line 1 of the Form. The members discussed possible recommendations related to these lines. Chessman agreed that line 1 of the Form 944 is a controversial line. The data provided on this line would be used by the IRS and by the Census Bureau. Duquette added that another concern was on the importance of keeping Part II of the Form. Is Part II necessary and why does it request the taxpayer to provide his monthly tax liabilities? Welsh replied that the reason for keeping the Form’s Part II is a regulatory one and that it may impact some taxpayers. For example, if a Form 944 filer should reach the $2,500 employment tax limit during the year, he is subject to make monthly deposits. This Part was kept on the Form 944 to protect the government’s interest and to provide better guidelines in measuring the taxpayer’s monthly tax liabilities, Chessman added. Duquette concluded his report saying that Jenkins will mail an information package on the Form 944 and other issues to be considered to all the Subcommittee #3 members for their review.

Oatley raised the question of what will happen if a taxpayer exceeded the $1,000 limit required in filing the Form 944 - will the taxpayer be requested to file the Form 941 if this happens or will he receive a penalty? Welsh explained that if a Form 944 filer believes his tax liability will change early in the year to surpass the $1,000 limit, he should advise the IRS. If the taxpayer is unaware the possible change, he could file Form 944 and pay the tax by January 31st without incurring a penalty. He would then be advised by the IRS. The only danger, Welsh indicated, is when the taxpayer surpasses the $2,500 limit at which point he should be filing Form 941, not Form 944, to avoid a penalty. Once the taxpayer begins to file Form 941, he will be notified by the IRS of his tax obligations and advise to file Form 941.

Bayder indicated that possible issues to be shared with the SBSE Committee in future teleconferences are: 1) a legislative issue and, 2) Form 940, FUTA tax.

Nagel congratulated Subcommittees #1 and #2 on their work and invited their members to join the upcoming Subcommittee #3 teleconference.

Chessman and Bayder also thanked the Subcommittees.

Other Issues
Nagel announced that the face-to-face meeting for the SBSE Committee will be in Chicago from June 9th to 11th.

June 9th is a travel day and so will the 11th after 12:00 PM. The TAP staff and Program Owners will work on the agenda for this meeting.

Approval Of January and February minutes
The minutes were approved by consensus pending a change on the fifth paragraph of page 2 of the February minutes.

Joint Committee Report
Oatley reported that a topic discussed at the last Joint Committee teleconference was that of the IRS Commissioner’s Advisory Council’s report as a tool in research. Another issue was the creation of a tracking system or process for the implementation of recommendations made by the TAP that were accepted by the IRS. Last, a TAP member has created a format to use when making legislative recommendations to the National Taxpayer Advocate. The format was discussed. Ramirez explained that in the past, the TAP addressed their legislative concerns by writing a letter to NTA Olson. The new format will allow more uniformity in raising these legislative concerns and tracking any recommendation.

Closing/ Assessment
Nagel thanked the members and the IRS staff for participating on the call.

Public Input
None.

Action Items
Jenkins will email an invitation to the entire SBSE Committee to attend the Subcommittee #3 teleconference on March 28th at 11A.M. ET.

NEXT MEETING:
Next teleconference of the SBSE Committee will be on Thursday, April 7th at 3:00 PM ET.