SB/SE Fair Compliance (Schedule C Non-filers) Committee Meeting Minutes

July 8, 2003
2:00 P.M. EDT

Attendance

• Chris Forzano, Vancouver, WA
• Richard Greenberg, Hinsdale, IL
• Edward Hanna, Tampa, FL
• Karen Kerrigan, Oakton, VA
• Manning H. Mosley III, Wayne, PA
• Paul Nagel, Glen Cove, NY (Chair)
• Owen Oatley, Holly Hill, FL
• Mary Peterson O'Brien, Designated Federal Official
• Teresa Smedley, Salem, IN
• Charles Taylor, Lancaster, CA

Absent

• Patrick Castleberry
• Richard Cormier
• Walter Fish
• Robert Taylor

Program Owner

• Michael Solitto

Note Taker

• Marla Ofilas

Welcome/Announcements/Review Agenda
Paul Nagel began the call by welcoming everyone and asked if everyone received the agenda for the teleconference and a copy of the May 3 rd 2003 minutes. Mary O'Brien informed the members if they have not received a copy of the May 3 rd minutes that it would be available on TAP speak.

Roll Call
Marla Ofilas began roll call and concluded that there were enough members available to make a quorum.

Review/Approve Minutes
Before reviewing and approving minutes, Paul asked if there were anyone from the public on the call. Paul noted that there were no one from the public that would be joining the teleconference.

Paul reviewed the upcoming meetings. The TAP panel will be having it's annual meeting in Washington D.C. and he also mentioned that the Joint Committee will be having a September meeting in Chicago. Paul requested from the members that all yearend reports be completed by September so he could present it to the Joint Committee at this time.

Paul postponed approval of the May minutes until everyone had a chance to review them.

Paul asked if anyone wanted to add to the agenda before the panel began discussing the topics. Teresa Smedley asked if she could do her report out for her sub committee. She will be leaving the call early and would like to share her report. Paul and Mike Solitto agreed.

Teresa began by explaining that her subcommittee met twice since the last face-to-face committee meeting. They have looked at research on different levels of pay, the EZ pay committee, for paying a flat percentage on self-employment in order to keep people from paying a penalty. The subcommittee is continuing their research so they are prepared with back up information when they present their proposal. Teresa hopes to have information with the proposal to pass on to the committee by August. Paul Nagel asked Teresa if the proposal is leaning towards weekly estimated pay program. Teresa explained that the proposal is a flat percentage rate. If someone makes a certain dollar amount they pay a certain percentage rate on their self-employment. Also, if they do this then they will have a safe harbor and their safe harbor will keep them from paying penalties even if they have under paid at the end of the year. Paul asked if the payments are paid 4 times a year. Theresa replied that you could make estimated payments as often as one likes. The subcommittee discussed using the 8109 coupons to allow the person to make payments every time they receive payments on their self-employment. The subcommittee has not yet reached that point. Instead, they are trying to determine what the percentage should be in order to come up with a safe harbor.

Paul asked if anyone had any thoughts or comments regarding Teresa's subcommittee idea. Ed Hanna felt that it was a great idea and he would like to see it pursued. Paul also felt it had great potential. Mike added that it was discussed among the subcommittee group and there's a lot of data and as usual there is no clear solution but there are some problems to deal with. Mike concluded that it does have potential and will continue to work on the issue. Teresa assured the committee they will have specifics within the next month. Teresa apologized to some of the members for not receiving the subcommittee minutes therefore they were not able to be apart of the last meeting. She will be contacting all the subcommittee members by next week to schedule a teleconference once she has the research from Mike. Paul asked if Teresa would CC mail him regarding the next meeting. Teresa agreed.

Action: Teresa will inform Paul of the next subcommittee meeting.

Report on Joint Committee Meeting
Paul concluded Teresa's report out and moved on to the next agenda item. Paul asked Ed if he would give the committee a report out on the Joint Committee meeting. Ed informed the committee that the main focus is to have all issues to be elevated to the Joint Committee by September 1 st . Ed also reported use of the sprint phone cards. TAP members should limit their use of the phone cards when traveling for TAP and also only for TAP business.

Paul also added that another discussion during the Joint Committee Meeting was the use of TAPspeak. Paul asked Mary if she had new information regarding this site. The Joint Committee was informed that it is not 100 percent ready. Mary felt that was new to her because it is up and running and also working fine. Paul informed Mary that during his Area 1 meeting, Daryle had attended and informed them that she's working out things with the vendors because all the improvements is costing TAP money. Mary replied that it is up and running and most members are using it. Mary offered to help if any members that are having difficulty accessing TAPspeak. Mary will email instructions on how to access TAPspeak and how to look up any information that relates to Schedule C and subcommittee minutes.

Action: Mary will email TAPspeak web link and instruction on how to sign on to TAPspeak. Mary will also look into TAPspeak access for Mike Solito.

Paul explained that the Joint Committee has not confirmed the location of their next face-to-face meeting. One option that has been mentioned is Chicago, IL. Paul expressed to the committee that he would like to have all proposals with him when he attends the face-to-face meeting. Paul asked the committee if there are any issues or concerns that the committee would liked expressed during the face-to-face meeting to please let him know. Karen Karrigan asked what the dates were for the October Annual Meeting. Paul explained that the meeting will be held October 2, 3, & 4th and the travel days would be on the 1st and 5th .

Updates from Program Owner
Paul turned the floor to Mike. Mike explained that there are two issues he would like to review. First, making the self-employment tax a uniformed amount with the social security amount. He mentioned to the subcommittee group that the Treasury Inspector General for Tax Administration had completed an audit were they had raised this issue and made a recommendation that IRS do the same thing the group is recommending. One further development on this issue is that IRS officials met with Treasury to discuss the audit and Treasury concluded that they will not support what the issue committee was going to proposal. Mike felt that this leaves the group up in the air because without Treasury support Legislation will not go any where. Mike will email the committee the explanation and information on the Treasury's reasons for not supporting a uniformed amount. Mary expressed to Mike that the committees' proposal on this issue is near complete. She asked if he would still to have the proposal to elevate to the IRS. Mike believed even if the issue will not go anywhere at this time, it would be a good idea to complete it so if the IRS is ready for it, it would be available.

The second issue that Mike wanted to review with the committee is that he will be retiring at the end of the month. The organization has not yet assigned someone to this issue committee. He explained that a manager maybe assigned in the interim for a short period of time. He will make sure the interim manager is briefed over the developments that has occurred so far and then there will eventually be a permeate manager. Paul asked if Mike suggest that this committee continues with the subcommittees. Mike felt that the Schedule C is close to finish, EZ pay has a lot of potential and should continue moving forward and the outreach and education is the one thing the organization has struggled with. Mary also asked since the filing requirement sub group is almost complete and will be turning in a report what should be done after that. Mike made a recommendation that this group could assist the outreach and education sub group. He felt the more people looking into this the better in the short run. Karen Karrigan agreed that the outreach and education committee could use the help.

Paul asked Karen Karrigan to give a report out on her responsible sub committee. Karen explained that her committee had a teleconference on June 10th . The committee discussed a number of issues. They review information Mike provided to the group, which was very helpful. The information was a profile data on non-filers. It gave a little information on who they are and demographics. This was helpful in targeting different produces that the committee was going to use. She offered to put it in an email format and send it to Paul so he can share it with the other members. Paul asked if she could also send it to Ed and Bob. Mary asked if Karen would be willing to CC mail her with the information. Karen agreed.

Action: Karen will send an email with the profile data on non-filers to Paul, Ed, Bob and Mary.

Karen continued to explain that it was a research study done in tax year 1996. The subcommittee discussed if the data was to old but they felt most of the data was relevant in defining the age group in non-filers. For example, 50% are age 25 to 44, 53% have the single filing status, 86% previously filed a return, and 16% have a potential refund. She felt there was some good data for the group in helping to target their efforts in terms of current non-filers. Other items that the subgroup discussed was an idea that Owen Oatley had brought up. Letting individuals who fill out a W-9, eventually letting them know that if they receive non-employee compensation, that they will be subject to self-employment tax as well as income tax. And one-way of accomplishing this is to include this information somewhere prominently and Owen suggested on page 3 on the W-9 form. Clearly one quarter of the page is blank. If we would place this on the W-9 form this would be one way of reaching people and letting them know about non-employee compensation. The group also discussed the different brochures and types of communication pieces that the group would use to let people know about filing a tax return. Owen put out some text and language of what the subgroup calls brochure number one, General Benefits of Filing a Tax Return for Schedule C filers. Essentially, it goes over some of the core benefits that were talked about. Benefits provided by Social Security, personal credit, business credit, and investment flexibility. If you review the profile data that was provide by Mike, in terms of the people that are not filing, these benefits will appeal to them in terms of credit and social security, investment flexibility and thinking about the future. This is something that could be included with IRS inquiry letters so people could look at the benefits of filing.

Action: Karen requested for the next meeting there be an action item for someone from the communications office that is fairly knowledgeable about the IRS Headlines program or about the success and the impact of the IRS tax tip program, talk with the committee to see if there is a compatibility of what the committee is trying to do with their efforts. Karen told Mary that she would contact her to see if this is something that could be done.

Karen discussed additional projects that her committee was working on. She explained that Dick Greenberg has been working with the Chicago public school system making contact. He had had a meeting with them and they were very open and very interested in implementing financial literacy and bringing this information to students. Dick continued to explain his meeting with Chicago public school meeting. Karen felt like it was a great idea and it should be pursued. If nothing happens in Chicago then the committee should move on. Karen did read a press release regarding Nina Olson's office in terms of her priorities for the year and one of the three priorities is financial literacy. Karen also felt that it was a brought term and doesn't know what Nina Olson has planned but certainly it is parallel to what the subgroup is trying to do.

Paul asked a question regarding the information for W-9 form non-employee compensation. He suggested that instead of this information being put on the 3rd page, could it be put on the 1 st page. Owen felt that would be a good idea but doesn't feel that the IRS would feel the same way.

Paul asked if the committee could move on due to the time. The committee agreed. Paul asked if Ed would like to speak about their subcommittee. Ed had put out a detailed report about Social Security benefits that would be available to Schedule C filers. Mary is in the process of transferring that report into an electronic copy and will forward to the committee when the whole report is completed. Ed asked if Mary would be able to forward it to the rest of the committee to get comments. Mary agreed.

Action: Mary will forward Ed Hanna's report to the issue committee once it has been transferred electronically.

Discussion of what happens when a subcommittee has finished work
Paul asked if everyone will have a copy of the subcommittee reports in August during the next teleconference call or will it be available in September. He would like to have something to present to the Joint Committee. Ed replied that the Joint Committee would like the completed report on September 1 st . The subcommittee should have everything available in before the August 12 th teleconference.

Mary asked Ed if the Joint Committee had mentioned anything regarding issues and progress; and when they wanted them. Ed replied that the Joint Committee only mentioned that they hoped that they would get everything before October 1st . Only completed projects would be put in the Joint Committee report.

Next Steps
Paul asked if everyone was aware of the next steps. Outreach and Education will not be completed and impossible to finalize. Paul asked if there should be a separate committee focused on Outreach and Education. Mike felt that this committee should just focus on Schedule C non-filers and keep it the way it is.

Public Input
No public input available during this call.

Closing/Assessment
Paul apologized for going over the time allotted. He reviewed the date and time of the next meeting which will be August 12, 2003 at 2 pm eastern. He expressed that he hoped that people will have the paperwork emailed and TAPspeak will be better utilized. Paul asked if there were any additional issues that needed to be discussed. None were added and the Paul adjourned the meeting.