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

December 9, 2003
Teleconference

Opening of the Meeting
Nagel opened the meeting at 11:02 A.M. ET by welcoming members and introducing the new Committee's Analyst, Marisa Knispel. Knispel briefly introduced herself and expressed her pleasure in becoming part of the Committee.

Nagel announced that due to budgetary constraints, all TAP committees were limited to one face-to-face meeting this year. Due to a conflict with the EITC Issue Committee which shares Ramirez as DFO, the Schedule C Non-Filer Committee cancelled the meeting planned for May and will hold their meeting on August 20-21, 2004. Location has not been determined.

Nagel asked members if they would like to make any change to today's meeting's agenda. No one had changes.

Program Manager Leatherman, who is currently on vacation, joined the call and said that she would only be able to remain on the call for about an hour. Nagel told her that he would appreciate it if she participated in their discussion of the EZ Pay Proposal.

Roll Call

Panel Members Attending

• Walter Fish, Bellmore, NY
• Richard Greenberg, Hinsdale, IL
• Edward Hanna, Tampa, FL
• Karen Kerrigan, Oakton, VA, Vice Chair
• Paul Nagel, Glen Cove, NY, Chair
• Owen Oatley, Holly Hill, FL
• Sandra Ramirez, Brooklyn, NY, DFO
• Teresa Smedley, Salem, IN

Absent

• Patrick Castleberry, Edmond, OK
• Chris Forzano, La Center, WA
• Manning H. Mosley III, Wayne, PA
• Charles Taylor, Los Angeles, CA
• Robert Taylor, Pittsburgh, PA

TAP Staff and IRS Staff Attending

• Margie Kinney, SBSE, TEC Burden Reduction Analyst
• Marisa Knispel, TAP Program Analyst
• Susan Leatherman, SBSE Program Manager

Quorum was met.

Focus Study Group
Analyst Kinney of the Office of Burden Reduction invited the members to participate in a study group that will meet via teleconference on Tuesday, December 16, 2003 at 3:00 P.M. ET. The purpose of the study, she said, is to analyze the record keeping and filing habits of corporate taxpayers. She has solicited the participation of TAP members from three different Issue Committees and was glad to say that three members from the Payroll Taxes Issue Committee already volunteered. She mentioned that items to be discussed would be: the process for record keeping, paper vs. electronic record keeping, how to determine the size of business, etc. Fish, Smedley, Hanna, Nagel, Oatley volunteered to participate.

Kinney thanked everyone and announced that the volunteers would receive confirmation of the meeting via email from Ramirez.

Program Owner Presentation
Leatherman indicated that Program Owner Cheryl Gramalia addressed two letters to the Committee thanking them for their recent recommendations on Filing Requirements and Information and Education. Knispel shared the letters with all Committee members in today's email and faxed them to Oatley.

The feedback from Gramalia on the recommendation of Filing Requirements was that although she agreed with the disparity between IRS and SSA filing requirements, implementation of the recommendation would require legislative change. Therefore, the Program Owner is unable to consider the recommendation for action at the organizational level but Leatherman noted that the National Taxpayer Advocate is including it in her 2004 Report to Congress.

The recommendation on Information and Education included four different proposals that upon review, Program Owner Gramalia found to have merit. Since implementation of the recommendations requires further study, Gramalia will prepare a response to the Committee within 180 days with an explanation of acceptance or rejection of each recommendation.

Leatherman added that the previous recommendations on Form W-9 and Education and Outreach are being worked as well. A TEC (Taxpayer Education & Communication) group is considering the latter, although they believe that the proposed recommendation is already part of their strategy. Gramalia will also address a response on these proposals to the Committee and a timeline for implementation will be included in the response.

The IRS will review the EZ Pay Proposal upon receipt, which the Committee will be discussing today, and consequently send feedback to the Committee within 60 days. Leatherman added that she participated in the Payment Issues Subcommittee meetings and provided them some guidance.

Leatherman continued to discuss Gramalia's letters to the Committee and explained that these are initial responses to the two proposals made. The IRS will continue to update the Committee on the individual proposals. Leatherman also added that these letters are public and any inquiries should be referred to her. Nagel requested that any letter or response be addressed to him. Ramirez asked that the IRS responses go through the staff office to ensure receipt by all parties.

Leatherman reported that a new Program Manager would be reporting. Rebecca Mack Johnson of the SBSE TEC organization will report on January 5, 2004. Leatherman will update her on the Committee's activities. No decision has been made as to whether or not Johnson will also replace Leatherman as Program Owner for the Issue Committee.

Greenberg asked if the Committee's involvement with the school and the education proposal was warranted. Leatherman said that it is definitely warranted and it has been placed in the organization's agenda for follow up. The proposal may be worked at a state and local level, she added. Leatherman suggested that perhaps the organization could design a program model to share with schools' curriculums. Kerrigan said that she believed the Committee's intent was not to develop a specific educational model but to encourage the public schools to use the IRS's existing curriculum. She added that TAP members should also be aware of IRS' educational programs as they interact with the public through outreach. Greenberg said that he has been working closely with W&I, SPEC Territory Manager Pat Kirk of Illinois who has made great strides in getting the IRS tax curriculum into the high school business programs. Greenberg feels, however, that the program needs to reach non-business students as well. Although the Chicago public schools are working with local IRS, there are about 500 schools not involved because they are not business related. Leatherman will get background information on what the IRS is doing, if anything, for this unaddressed area.

Members welcome any suggestions from the Program Owner on items to focus on related to this issue and on how to fine-tune their recommendation. Fish added that the need for education also affects the professional schools. Leatherman said

that the IRS's Taxpayer Education function presents classes and seminars on taxes to many industries affected by self-employment problems. These are seminars on how to run a business and on the tax obligations for the self-employed.

Review and Approval of Minutes
Since some members did not have the chance to review the revised minutes, the minutes were approved under the conditions that minor editorial changes could be made hereafter.

Fish moved to approve the August 19, 2003 minutes and Smedley seconded the motion.

Oatley moved to approve the October 3, 2003 minutes and Greenberg seconded the motion.

Greenberg, Oatley and Fish requested that the minutes be faxed to them rather than emailed.

Subcommittee Reports

Payment Issues
Smedley asked for consensus on elevating the “EZ Pay” Proposal. Greenberg motioned to elevate and Hanna seconded the motion. Ramirez indicated that the proposed recommendation should be from the entire Schedule C Non-Filer Committee, not from the Subcommittee for the Simplification of Estimated Tax Compliance. Therefore she requested the proposal read “From: Schedule C Non-Filer Issue Committee” and be dated December 9, 2003. The members agreed to the request. Castleberry will make these changes and forward the revised proposal to Ramirez and Knispel. Knispel will then send it to Program Owners Gramalia and Leatherman, TAP Analyst Toy and all the Committee members.

Fish asked whether a subcommittee meeting is considered official. Ramirez explained that subcommittee meetings are not official but are viewed as a working group session that reports to the full committee. Nagel added that the issues worked by the subcommittee must have the consensus of the subcommittee members before they are reported to the full committee.

Leatherman noted that the Payment Issue Subcommittee was seeking issues to work. One issue she gave to the Subcommittee is: how to entice people to enter into making electronic tax payments? Possibly one enticement could be that a delinquent taxpayer could request the abatement of ES tax penalties. She stressed the focus be on the penalty relief with conditions rather than amnesty. She believes that the recommendation of a federal tax amnesty would create more problems than it solves and is too broad an issue for an Issue Committee to focus on. She also suggested the development of compliance features to the Offer In Compromise (OIC) Program that relates to Schedule C non-filers. Fish, the Subcommittee chair, said that he will raise these at their next meeting. Oatley noted Leatherman's suggestions could crossover between the two subcommittees (Payment Issues and Outreach & Filing) and could be worked conjunctively.

Outreach and Filing
Kerrigan briefed the members on the current issues of the subcommittee:

1) Simplification of the letters and notices that the IRS sends to non-filers. The IRS will provide the subcommittee with samples of these. 2) A non-filer center is needed at the IRS website to help taxpayers become tax compliant and learn of their tax obligations. 3) Publication 594, The IRS Collection Process, should contain an executive summary. 4) The expense threshold on the Schedule C-EZ should be increased. 5) More information on payment options and collection should be distributed. For example, the information that is provided with the Offer-In-Compromise applications and Installment Agreements is not acceptable. 6) Oatley noted that Publication 594 sent to non-filers has too much information and needs to be distilled down. Other alternatives must be offered to taxpayers. 7) Leatherman noted that when the IRS sends a substitute-for-return letter to a taxpayer, a completed form 1040 and related schedules should be included so that the taxpayer can see how the IRS did the calculations.

DFO Report
Ramirez asked Nagel if former Committee Analyst Peterson worked with them on the location for their meeting in August. Nagel said that Peterson would research the cost estimates of traveling to Chicago, Denver, St. Louis and Dallas. Knispel will follow up on this research.

Public Input
None.

Closing Assessment
Smedley confirmed that the May subcommittee meetings were on the calendar since the May face-to-face meeting had been dropped.

Fish moved to close the meeting and Smedley seconded this motion. Nagel announced that subcommittees' meetings would be held next month. Ramirez explained that these meetings will not have official minutes. She asked Knispel to join these meetings and provide support, such as setting up the call-in details.

Action Items
Leatherman will provide information to Committee on IRS tax curriculum in non-business schools.

Leatherman will share samples of IRS letters and notices sent to non-filers with the members.

Knispel will make any editorial corrections for August and October minutes and post/distribute accordingly.

Castleberry will make corrections on the “EZ Pay” Proposal. Knispel will distribute the revised proposal to Program Owners, Toy and Committee members.

Knispel will work on the August face-to-face meeting arrangements and ensure the master calendar reflects the changes.

NEXT MEETING
Teleconferences on January 13, 2003 for:

• Payment Issues Subcommittee at 11:00 AM ET
• Outreach and Filing Subcommittee at 2:00 PM ET.

Teleconference on Tuesday, February 10, 2003 at 11:00 AM ET for Schedule C Non-Filer Committee.