SBSE Issue Committee Meeting Minutes

May 5, 2005

Opening of the Meeting
Nagel opened the meeting and welcomed all the members.

Roll Call

Panel Members Attending

• Margaret Balcom, Concord, CA
• Aaron Bell, Kenmore, NY
• Bill Bly, Wayne, PA
• Paul Brubaker, York, PA
• Paul Duquette, Amherst, WI
• Donna Hafer, Burlington, KY
• Steven Hoffman, Columbus, OH
• Bradley Moore, Decatur, GA
• Paul Nagel, Glen Cove, NY, Chair
• Owen Oatley, Holly Hill, FL
• Mary Suther, Dallas, TX
• William White, St. Joseph, MO

Panel Members Absent

• Charlotte Cassady, Talbotton, GA
• Robert Forst, Encino, CA
• Stanley Miller, St. Louis, MO
• Howard Perkins, Suisun City, CA
• Steve Rue, Mechanicsville, VA

Quorum was met.

TAP and IRS Attendees

• Helene Bayder, SB/SE Program Owner
• Michael Chesman, TAP SBSE Liaison
• Shelley Foster, SBSE Program Manager
• Sid Gardner, SBSE SPOC
• Dianna Gunter, SBSE Senior Analyst
• Marisa Knispel. Acting DFO
• Rafael Dacal, SBSE Analyst
• Debbie Moore, Social Scientist
• Deborah Sabatelli, SBSE Analyst
• Kathryn Wheeler, SBSE Analyst

April Meeting Minutes
The minutes were approved.

Program Owner Presentation
Bayder announced that we would have two new issue presentations. The first presenter is the SBSE SPOC Sid Gardner who would speak on prioritizing SBSE notices and the second, Shelley Foster, who would speak about the letter the IRS sends to taxpayers to schedule an appointment for an exam or audit.

Gardner introduced himself and explained the purpose of his team. In 2004, the IRS recognized that notices sent to taxpayers on business issues had problems with clarity and accuracy. In the past, notices were designed based only on volume but currently volume and other factors are used in designing notices and in identifying notices that need improvement. The SBSE SPOC’ s (Single Point of Contact for Notices) goal is to develop a process to identify notices that should be redesigned and to prioritize the redesign efforts considering factors such as taxpayer burden, taxpayer satisfaction, IRS burden and the impact on the IRS operating divisions, financial impact to the IRS, taxpayer compliance and effectiveness of the notices. The SPOC needs the TAP to explore ways to improve these notices by considering factors such as taxpayer burden and satisfaction.

Social Scientist Debbie Moore continued elaborating on the issue. Moore explained that the SBSE researched oversight reports, websites and processes on notice redesign and they concluded that the purpose in the design of a notice is to communicate effectively with taxpayers. In order to do this, the SBSE needs to take into consideration the perspective of the taxpayers and their representatives. This is why the SBSE needs the TAP’s input: to reach the taxpayers’ perspective mainly related to the taxpayer satisfaction factor. Moore also invited the members to share any ideas or comments they might have on the other factors the team must use in their task. Moore added that the team is in the process of completing their assignment and requested feedback from the TAP in prioritizing these SBSE notices by June 30th. Chesman suggested the members consider the tone of the notices in their review.

Following this presentation, the members discussed the progress of the current subcommittees and their respective issues in order to prioritize their work. The subcommittee working on the issue of Rounding-Off reported that Pat Hammond will reconvene with the TAP to offer a summary of their research and progress at the end of July. Hammond would also appreciate any additional input from the TAP in the meantime. Bly clarified that Analyst Erik Miller was performing research on revenue generation and its cost implications before the IRS team could conclude their study. As soon as this research is ready and the study concluded, the subcommittee members will receive Hammond’s feedback and continue working on the rounding-off issue as deemed necessary. Bly also reported on the subcommittee working on the collection Form 433-A. He explained that the members submitted their recommendations to Supervisory Revenue Office Rick Chizum and await the final draft of this Form before continuing discussions. The subcommittee observed, Bly explained, that Form 433-A requests information from the wage earner and the self-employed taxpayer in separate sections of the Form and recommended that these two sections be consolidated or that the Form be separated into two forms. Another idea was creating a third form for Schedule C filers and small corporations. Duquette, as chair of the subcommittee working on collection Form 433-B, reported that the members recommended that the Form request accounts payable as it already requests the accounts receivable from the taxpayer. They also recommended simplifying the accounts receivable information requested on the Form with a limit on the dollar amount of these receivables thereby avoiding negligible dollar amounts. One last recommendation made by Oatley to the IRS was to add the question: “Do you anticipate a decrease in business income…?” to the Form. This subcommittee has also completed their work until further request from the IRS. Due to the small size and similar issues on both subcommittees, Knispel suggested combining them as one.

The second presentation by the Program Owners was made by Shelley Foster, Exam Operations Support Manager, on the correspondence sent to taxpayers to notify and prepare them for an examination. Foster explained the difference between a tax compliance officer who audits tax returns such as Form 1040, Schedules C,D and F and the revenue agent who is a field examiner auditing corporations and more complex tax returns. Foster also explained that two years ago the IRS revamped the examination process under the Exam Reengineering effort in order to make all audits consistent for the IRS personnel who conducts them. The process of contacting the taxpayer for an audit involves a contact letter, enclosures and an explanation of the taxpayer’s rights. The Internal Revenue Manual (IRM) also requires that the auditor ascertain the taxpayer’s filing requirements and probes for certain income-related questions. In surveys done by the IRS about the examination/audit process, dissatisfaction was found on 1) the length of the audit and 2) the fact that many taxpayers did not clearly understand the examination process.

The purpose of Foster’s team is that of improving the appointment letter sent to the taxpayer to establish an appointment for the audit. The aim is to convey enough information on this letter so that the taxpayer understands the process of the audit and be prepared for it.

Duquette asked, “Could we just have one letter as opposed to two appointment letters?” (pre-read material, Ltr 2205A and Ltr 3572) Forster explained that the two letters are designed according to the sophistication of the taxpayer. Letter 3572 is simpler and includes topics such as the EIC while Letter 2205A is designed for taxpayers with more sophisticated business knowledge. Nagel suggested that the print in which the letters are written is hard to read for older taxpayers and that it be larger. Foster said that this is a good recommendation. Foster continued saying that the IRS is aware that taxpayers do not read enclosures, just the appointment letter. Therefore, we are trying to prepare the taxpayer to understand the process of the audit and thereby reduce the length of the audit making it more efficient to all involved. Brubaker complemented Foster on the context of these letters and enclosures and in the order of importance. Foster indicated that much research was done in redesigning these letter and that the reengineering has also contributed providing consistency to the audit process.

Election of a Vice-Chair
Brad Moore was elected vice-chair of the SBSE Committee.

Other Issues
Nagel suggested holding an administrative teleconference on Thursday, June 2nd at 3:00 PM ET.

Closing/ Assessment
Nagel thanked the members and the IRS staff for their participation. Meeting closed at 4:16 PM ET.

Public Input
None.

Action Items
Knispel and Jenkins will arrange two subcommittee teleconference to discuss the issues presented today.

NEXT MEETING:
Next teleconference will be on Thursday, June 2nd at 3:00 PM ET to discuss the agenda for the face-to-face meeting that will take place in Philadelphia, PA on June 10th and 11th .