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CITIZEN ADVOCACY PANEL (CAP)

Brooklyn District Meeting Minutes

Date: August 17, 1999

Time: 6:00-9:30 PM

Location: Garden City Office

Panel Members Attending

Jim Montes, Chairperson

Marie Nahikian, Vice Chairperson

Kristen Bailey, DFO

Marjorie Louer

Horace Aiken

Ed Maher

Tony Fandozzi

Laura Greenberg

Ethel Richards

Burton Kahn

John Rotondi

Matt Mihovich

IRS Staff Attending

Steve Burgess, Asst. District Director

Ira Moseley, CAP Analyst

Ron Boyea

Charles Utter

Absentees

Ellen Murphy, District Director

Kevin McKeon, CAP Manager

Louis Morizio, CAP Analyst

Leonides Rivera

Guests (all IRS employees)

David Bonanzinga

Laura Valleley

Phyllis Maggio

Howie Silverman

Margaret Scheafer

Public Attendees

None

I. Review of Minutes for August 5, 1999

Chairperson called the meeting to order and he then asked all persons in the room to introduce themselves.

The minutes were approved with the following changes. Laura stated that reference to the tracking committee was not present as incoming calls and customer inquiries. Tony volunteered to help track and tie this into the Performance Measurement aspects.

Tony wanted to know if the CAP was receiving updated minutes.

Follow-up: CAP manager will clarify the procedure for updating the minutes at the next meeting.

The meeting was then turned over to the Chairperson.

II. Reports of the Working Committees

Letters of Introduction

Marie wanted to know why the letters of introduction had not been forwarded to the respective legislative leaders.

Followup: The letters had not been sent yet due to workload priorities. A total of 90 letters were generated and sent on August 31, 1999. Two letters were sent to US Senators, fourteen letters to Members of Congress, twenty-three to State Senators, and 51 letters to State Assembly Members.

Community Outreach

No significant activities were announced. However, Panel member Richards requested 100 flyers to hand out for an upcoming meeting.

Web Site

Panel member Ed Maher advised the panel that changes to the main site regarding the "door" has been made. However, still unavailable were changes on schedules. He stated that, hopefully, such changes will be made by the end of September for updating the text. He stated that there is listing of changes and additions. Ed also wants all members to sign releases for any pictures that maybe used on the web page. Matt also emphasized the need for the releases. Ed stated that he would do further research on the issue.

Language Diversity

Panel member Matt Mihovic opened by giving reasons for missing the prior meeting. He also stated that he agreed with Laura about the issue of many immigrants (i.e. Russians) having the capacity to speak English upon their arrival to the United States. He has spoken with Laura about the subject, and sees the need to maybe identify another group, while keeping the Korean group. He stated that additional research must be conducted on the Korean community by outreaching to their respective leaders. He also stated that the primary objective is to increase comprehension for both preparers and taxpayers.

Steve Burgess stated that the IRS can provide some information as per previously compiled data. He stated that it maybe somewhat data given it is 1990 information, he nonetheless feels that it is very useful to identify focus issues. Matt agreed with Steve.

Marie Nahikian stated that she would give some language diversity contacts to Matt. She also requested from Matt an outline to focus the outreach questions. She also restated her prior need to focus research towards the Brooklyn and Queens Libraries. Laura recommended that the IRS official in charge of EIC be given the task to ascertain data.

A suggestion was made by an IRS employee to solicit churches and other government agencies. Another employee spoke that some of the problems (as per language) were the fact that many practitioners often persuade vulnerable taxpayers to assist them with something they don’t want.

Earned Income Tax Credit

Panel member Greenberg stated that the next meeting will be in Brooklyn on September 9, 1999. The objective will be to determine what recommendations to make as per drafting a final report. Her particular emphasis will be to look at the broader issues in terms of legislative opportunities. She stated that they will also look at South Florida’s position on the EIC.

Performance Measurements

Panel member Fandozzi thanked the members for their suggestions. He further went on to explain the Booz-Allen recommendations and what he felt were their objectives. He also stated that he has completed a proposal. Matt complimented Fandozzi about his work. Fandozzi stated that the final Booz-Allen product will be substantial. He feels that Booz-Allen is doing a good job and he does not want to criticize the process. However, he expressed concerns about the impact of the final report due to the sheer volume and scope. Panel member Montes asked about the timing of the final report, with Fandozzi replying that Booz-Allen is anticipating November of 1999.

Individual aspects within this area arose about disclosure and tracking of taxpayer inquiries. Panel member Aiken stated that he thought the issue of disclosure was resolved and that "we" didn’t need to know additional information; but that the cases were being tracked accordingly. Marjorie Louer supported the comment. Taxpayer Advocate Bailey said that tracking taxpayer inquiries was extremely important and that the CAP staff has been doing a good job. However, she again cautioned the need to advance additional information beyond the necessary sundry items in order to process the inquiry and/or submit to a given panel member.

However, panel member Mihovic questioned Taxpayer Advocate Bailey as to why the IRS couldn’t create an adequate tracking system. He posited the question with an example involving a coding system for the types of "recurring or systemic" problems. Panel member Louer stated her single objective is to have results – simplistically – names are not necessary. Panel member Nahikian stated that she supports the position of Panel member Aiken that – that in general "we don’t need the names and other aspects of the taxpayer, just to realize the underlying problem." Panel member Richards sought to know what panel member Kahn secures from a given taxpayer who wishes to speak to panel member.

Kahn stated that he asks for the information necessary to attempt problem resolution. The taxpayer is permitted to disclose information to panel members at his or her discretion.

Marie Nahikian asked when the next meeting would occur of the Balance Performance Measurements workgroup. Panel member Fandozzi replied in two weeks.

8109-B Payment Coupons

Panel member Kahn and Edward Maher offered the following review of the problem:

An accountant walked into the IRS Center Brooklyn to secure a blank 8109B, the Federal tax deposit coupon. The tax was due that day and his client did not have the form. The IRS refused to give a form without the request being on company letterhead.

Background: Form 8109B is an over-the-counter coupon available as a substitute for Form 8109. Form 8109 is pre-printed with the EIN and company name in booklet form. Each booklet contains 24 coupons. If a taxpayer business cannot wait to receive Form 8109 in 4 to 6 weeks to make a timely deposit, then a written request but be made on company letterhead with the company’s EIN and name of receiver.

Action: We first investigated the procedure for procuring 8109 booklets: The coupon booklet is prepared and printed by a private vendor. When the IRS receives an application for an EIN, it automatically orders a booklet from the vendor containing business name, address, and EIN to be printed thereon.

The vendor sends it out with an IRS return address. If undeliverable, the booklet comes back to an IRS research department which double checks the address, calls the taxpayer, makes corrections if necessary, and a booklet is mailed to the taxpayer. The IRS has an "Auto-gen" system, which determines (via scanning) when the #6 or #7 coupon is used and automatically generates to the vendor a purchase order for a new booklet. This procedure seems quite foolproof.

Burton and Edward next investigated IRS procedures for receiving taxpayer’s payment whether on the 8109 or 8109B. Payment is made to a bank with form 8109. Money is withdrawn from the taxpayer’s account. Money is transferred electronically in a batch (many 8109’s) to a Federal Reserve Bank. The 8109 coupons are sent to the bank’s central operations (which is sometimes called TTF) and then microfilmed. The coupons are then batch-sent to the IRS regional office where they are scanned. The IRS then destroys original coupons in 30 days. However, if there has been a mistake (EIN or name), the taxpayer would bring in a cancelled check to the bank. On the check, the bank had put an imprint of the batch number. The IRS has a money tape, which matches batches and from this looks for the deposit so that errors can be identified. This aspect as well seems rather foolproof except that the IRS claims that banks often take a long time for verification.

The next issue was to attempt to determine why the IRS has such complex requirements to obtain 8109B forms. On one hand, customers tend to write incorrect EIN on 8109B. Secondly, the Queens office responded by stating that nearly 33% of the requests were for new businesses and some 66% of the requests were for proper tax deposit coupons not received on time. Thirdly, the Cincinnati Service Center replied that it had: 1)no information on how many requests were made; 2) they had no information on the types of mistakes; but 3) most mistakes are attributable to practitioners.

Apparently, practitioners evidently have a software package of tax forms, one of which are the 8109B. However, the software-printed form 8109B does not scan properly. Therefore, the IRS warns practitioners that "this form is for information purposes only. DO NOT USE!"

Proposed Solution

Business Customers: To get form 8109B, the procedures already provide that, with a written request on company letterhead, forms are to be provided to the requestor.

Tax Practitioners: Amend the code as follows: Upon proper identification, a tax practitioner with a request on his own letterhead may be furnished with up to 25 coupons of the 8109B per request.

Ed and Burt agreed that they would perform additional investigation on these areas.

Public Meeting

Ed Maher gave an overview of progress for the town meeting. He touched on the brochure, flyer, press release; each of which has been completed. The panel desires a copy of the latest press release. He also addressed the issue of the site itself. A comment was made as to security, which prompted Marie that we should contact the local precinct to secure officers. Overall, Ed stated that the progress for the meeting has been steady and positive.

Matt Mihovic asks if an agenda has been made. He commented that it would be nice if the panel could respond to TP’s issues during the meeting. Tony echoed the same. However, Ed, Marie, and Jim countered that it would be more expedient and less cumbersome to address such matters on an individual basis by panel members.

III. Public Comments

The only guests were additional IRS employees, namely David Bonanzinga, Laura Valleley, Phyllis Maggio, Howie Silverman, and Margaret Scheafer.

Silverman addressed the issue of 1203B, citing articles and other commentary about heavy-handed IRS activities. He also stated that the majority of IRS employees are now thinking twice before completing routine enforcement actions. He was tired of the IRS bashing. Because of this, there were several responses from the panel.

Ethel stated that CAP acts like a two-way mirror and the public attitude will change with the addition of more CAPs. She also wants the IRS to do more preventive steps. Marie agreed with Ethel stating that CAP walks a fine line, but it does not want CAP to focus on soft issues. Jim stated that CAP wants to support IRS employees.

One IRS employee, Laura Valleley, stated that she disagrees with those ideas of Silverman. She believes that the IRS has always stressed strong customer service, but there have been too many mindsets to aggressively enact enforcement matters.

IV. Old Business

No comments.

V. New Business

Several panel members submitted new business issues.

Ethel Richards – Small Business/Electronic Filing

Report to Committee on Electronic Filing

Meeting on Aug. 16.1999

Attended by Ethel Richards

On August 16, 1999, Bob Barr, the IRS Assistant Commissioner of Electronic Tax Administration, addressed IRS staff and Electronic Return Originators. As the only CAP member in attendance, my objective was to gather information about electronic filing, and to determine how such applications could help small business ventures during their first year operation. Of particular interest is the filing of Form 941 and 940.

The information presented by Mr. Barr was informative and educational. He explained that the mission and the goals of the program were to revolutionize how taxpayers transact and communicate with the IRS. He further commented that among other points, the IRS anticipates to:

1) Electronically transact 80% of the US taxpayers by year 2007

2) Obtain 99% transaction integrity and accuracy

3) Achieve 90% Taxpayer Satisfaction

4) Reach 90% distributor satisfaction

5) Reflect 70% employee satisfaction

To test the impact of Electronic filing in 1999 [1998 tax period]

The IRS sent out to 8 million taxpayers pin codes that could be used one time in place of signatures when filing electronically. Selected practitioners were invited to participate in the test, they were allowed to choose their own pin codes to be used as their signatures for only that tax year.

Credit Card Payments

Payments made by Master Card, American Express and several other major credit cards were accepted. Not accepted is Visa, however this will soon change. Payments by credit cards are treated as merchant purchases, thus eliminating the higher interest incurred by a cash charge. Most credit card companies have agreed to use Line I on the billing statements in order to highlight fees, while Line 2 shows the tax. The largest payment yet received was a payment made by AMEX in the amount of 5.2 million dollars.

Present advantages of Electronic Filing

1) Reduces paper work

2) The usage of the Hawaiian time zone to file

3) 40% of electronic filers are less likely to hear from the IRS

4) Reduced time to offset child support, student loans, and previous liabilities.

Small Business Applications

Currently 2.5 million small businesses utilize electronic deposits. Of this amount, over 1.5 million businesses are mandated to do so because of payroll factors. However, until a small business files their first payroll tax, they are unable to utilize the electronic deposit system.

Summation

At the end of the session, I spoke to Mr. Barr and offered a different perspective of the typical newly formed small business owner. I also inquired about the feasibility of using advertising dollars to encourage new small businesses to file electronically. To support the suggestion, the following advantages were offered:

3) Encourage utilization of the Internet to secure step by step instructions.

Tony Fandozzi

Submitted a draft letter regarding taxation of Americans by foreign nations and the disallowance by New York State. He requested the panel consider that the Department of Taxation and Finance allow such a deduction. However, the Chair and other members felt this was a state tax issue and not a CAP issue.

Tony withdrew the suggestion.

Adjournment

The meeting was adjourned at 9:30 PM.

I hereby certify that, to the best of my knowledge, the foregoing minutes are accurate and complete.

Jim Montes, Chairperson

Brooklyn District Citizens Advocacy Panel

The Panel at its next meeting will formally consider these minutes, and any corrections or notations will be incorporated in the minutes of that meeting.

Attachments:

Agenda Items

9/2/99

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