What IRS Taught Me about Building Barriers

During the IRS and Tax Court shutdown, we have less material to work with and more time for observations and reminiscences from readers.  Chronic contributor Bob Kamman assures us that there must be others who can do better than this. 

I have stories about shutdowns that I could tell from my time at the government but mostly my impression of shutdowns is that they are an incredible waste. I feel it would not take much to find a better way to fight over disagreements about the budget.  

Bob tells us a story about barriers and Service Centers. Having been at several Service Centers, I can say that the barriers to entry there pale by comparison to entry to the Martinsburg Computing Center where the IRS stores the masterfile information and creates significant barriers to entry. Keith

Before I get to that story, here is something to watch for when this “partial government shutdown” finally ends.

In November 1995, the IRS was shut down for only four days. Some of the rest of the government then closed again for 22 days, when negotiations between President Clinton and Speaker Gingrich failed, but IRS was spared.

The White House was not reluctant to place blame on Congress, so it released a report showing how much tax was not assessed or collected during the brief furlough of examination and collection employees. The Treasury Department calculated that $400 million was lost by lack of enforcement action by IRS over a four-day period. That round number of $100 million a day translates to $165 million in today’s dollars, or about a billion dollars for every six working days.

This estimate was confirmed in a White House report on the costs of the October 2013 federal government shutdown. “IRS enforcement and other program integrity measures were halted,” it stated. “IRS was unable to conduct most enforcement activities during the shutdown, which normally collect about $1 billion per week.” (Emphasis in original.)

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Will similar numbers be provided this time? Or maybe there will be a compromise. Most federal budget analysts agree that every dollar IRS spends on enforcement brings in about $10 of revenue. The Democrats have offered $1.6 billion for border security. The President could refuse such a large sum. “Just give me $500 million more for IRS,” he could say. “Then let me spend the $5 billion it produces, how I want.”

(Much of that half billion would be paid in salaries and come back to the government anyway. IRS employees are notorious for paying their income taxes.)

But the current impasse reminds me of my IRS days, in the mid-1970s, when I was an intern in the National Office’s Taxpayer Service division. Interns were not unpaid college students brought in for the summer (like my son in 2003, at the White House photo office). We were full-time permanent employees, recruited nationally for training that would create the next generation of IRS leadership. The assignment lasted for a year, followed by placement in some essential program.

There were only three of us in Taxpayer Service, but there were more than 20 “Admin” interns who rotated among what were then the four divisions of the Administration function (if I remember them correctly): Personnel; Facilities Management; Training; and Fiscal.

There were occasional “classes” for interns when senior executives would lead discussions of IRS problems and how they had been solved. When it was the turn for Facilities Management, the topic for discussion was whether a rather large sum should be spent to build fences around Service Centers.

I doubt any of us had ever considered this question. Service Centers are huge buildings on large parcels of real estate. For example, the one in Ogden, Utah, is a single-story brick building with 504,741 gross square feet located on a 60-acre site. It operates 24 hours a day, 7 days a week, and provides work space for approximately 2,500 federal employees.

 

That would require a lot of chain link, we agreed. Of course, security is an important issue for all government buildings, but especially IRS work locations. Who would argue with fencing them off?

But fences are meant either to keep people in (not an issue at IRS) or to keep people out. So whom were we trying to exclude?

This was before daily headlines about terrorist threats. But there have always been angry taxpayers, including some with mental-health issues. And by then the “Anarchist Cookbook” had instructions for building bombs. So fences were necessary.

Or were they? The class was asked to imagine a potential bomber driving past the Service Center, noticing a fence around it, and therefore deciding it was not worth the effort to penetrate. If this person existed, then the cost of the fence would justify discouraging the “casual bomber.” But of course, someone intent on bombing IRS could probably figure out a way to get over, under, around or through that fence.

The point was: The fence is not there for security. It is there to create the appearance of security. The otherwise-determined bomber, it was hoped, would decide that “if there is that much security on the perimeter, there must be a lot more of it inside.” So according to the cost/benefit analysis of the day, the fences were built and the contractors paid.

This anecdote may have nothing to do with current affairs, but for me there are always reminders.   For example, I thought of it when I saw this April 2018 story about what happened to a fence at the Fresno Service Center – which, however, was breached from the inside out.

 

A Close Look at the IRS Shutdown

As we settle in for what may be a long shutdown of the not yet funded parts of the federal government, including the IRS, frequent commenter and occasional guest blogger, Bob Kamman, brings us a post on what to expect at the IRS. I know from email traffic among tax clinics that the fax machine at the CAF unit has been turned off meaning that those trying to notify the IRS of the power of attorney must wait for the IRS to reopen before sending in form. The turning off of the CAF fax machine is just one tangible way of knowing that the IRS has shifted to shut down mode. Bob gives an employee by employee breakdown of who is working.

 

We wrote previously about a law suit brought by National Taxpayer Advocate Nina Olson after the Taxpayer Advocate Service was deemed non-essential in its entirety during one of the most recent shutdowns. The NTA lost the suit but may have won the war, or at least partially so, because the NTA and certain TAS employees are deemed essential now which could be critical from taxpayers facing a hardship. I suspect the NTA faces a significant hardship herself because of the timing of this shutdown and the issuance of her annual report to Congress. Read on for the details distilled for us by Bob straight from the contingency plan created by the IRS. For prior coverage about government shutdowns and the IRS, see our post here which gives a broader perspective on government shutdowns and which links to prior posts on the subject. Keith

After all the work that the Internal Revenue Service put into planning for a shutdown, it would have been a shame to waste it.

The IRS contingency plan, revised on November 30, 2018, provides many useful insights into what the federal tax agency considers important and which employees it considers essential. The 110-page document can be found here.

The priorities include:

1) Open the mail. There might be checks.

2) Cash the checks.

3) Protect the statutes of limitation, for collection and assessment, from expiring.

4) Keep the computers running and keep preparing for tax season.

5) Especially, keep preparing for implementation of the 2017 tax law changes, because money for that has already been appropriated.

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IRS has a total workforce of 79,868 employees. Of those, 9,946 are “excepted” to some extent from furlough. The rest will not return to work until their jobs are funded. Most likely, they will eventually be paid for their time away, but they might miss paychecks until the shutdown ends.

If the government had to close, the last couple weeks of the year were the best time. Many employees with seniority and “use or lose” leave time, were away on planned vacations anyway.

Here are some highlights from the “Lapse in Appropriations Contingency Plan,” with a focus on several areas of importance to readers of this blog.

“Excepted” employees are categorized as A, B or C.

Category A employees have jobs that “include those authorized by law and those funded by multi-year, no-year, and revolving funds or advance appropriations that would not be affected by a lapse in an annual appropriation.” There are 1,900 of them.

Category B employees perform tasks that are “necessary for the safety of human life or protection of government property.” Oddly enough, this includes “administrative, research, and other overhead activities supporting excepted activities” such as “completion and testing of the upcoming Filing Year programs,” “processing paper tax returns through batching,” and “Upcoming Tax Year forms design and printing.” There are 8,017 of them.

Category C employees are those needed “to bring about the orderly closedown of non-excepted activities. Activities of employees during this period must be wholly devoted to close-down the function. Upon completion of these activities, these employees would be released.” There are 29 of them, including the only three from the Office of Professional Responsibility with any shutdown duties.

Chief Counsel

The Chief Counsel (lucky guy) is a Presidential appointee who is not subject to furlough.   As for the rest of the office, 286 must show up now and get paid later for these purposes:

The plan excepts, on an as needed basis, those personnel assigned to litigation that is scheduled for trial or where there is a court-imposed deadline during the first five days of a lapse. Personnel are not generally excepted to perform litigation activities where a trial or other court-imposed deadline is scheduled more than five days after the start of the lapse. Personnel assigned to those cases should seek continuances as part of an orderly shutdown. If a continuance is denied, the case will be reviewed to determine if work on the case may be excepted.

Chief Counsel personnel are also excepted, on an as needed basis to provide required legal advice necessary to protect statute expiration, and the government’s interest in bankruptcy, lien, and seizure cases. Personnel excepted to perform this work are also excepted under Category B. The employees in General Legal Services are in Category A3, because they are needed to support activities that are authorized to continue during a lapse in appropriations. The employees in Criminal Tax fall into Category B because they maintain criminal law enforcement and undercover operations. Fifty-six employees are supporting the Tax Cuts and Jobs Act and fall into Category A1 because they are funded with the special two-year appropriation provided for TCJA activities.

Appeals

18 employees are “excepted” from shutdown:

Appeals requires that a minimum number of technical staff remain active to ensure statutory deadlines are met. Taxpayer compliance cases, when appealed, must be adjudicated within a statutory timeline that is not under the control of the IRS. If cases are not monitored, statutes may lapse resulting in adverse impacts to the IRS and US government tax collection functions.

During a lapse, the Chief, Appeals will hold a daily virtual meeting with excepted personnel to identify any imminent statutory deadlines or other threats to government property. As necessary, excepted personnel will be activated to take actions that address the imminent threat. All other employees will return to furlough status until the following day.

National Taxpayer Advocate

“National Taxpayer Advocate (NTA) has identified 84 employees (the NTA and one per TAS office) who are required on an on-call basis based the necessary-for-the-safety-of-human-life-and-the-protection-of-property exception (Category B).” That’s not grammatical, but that’s what the plan says. The plan’s chart (Page 96) shows 82, not 84 employees.

 

The local Taxpayer Advocates (one per TAS office) are to report intermittently to check the mail. There might be checks, and the filing of a Taxpayer Assistance Order suspends the statute on collection. Their instructions:

Check mail one or two hours a day, up to three days a week, to comply with the IRS’s requirement to open and process checks during a shutdown while also complying with the statutory requirements that TAS maintain confidential and separate communications with taxpayers and that TAS operate independently of any other IRS office, as described in IRC §§ 7803(c)(4)(A)(iii), 7803(c)(4)(A)(iv), and 7803(c)(4)(B). Screen the mail for incoming requests for Taxpayer Assistance Orders and notify the appropriate Business Unit that a request has been made tolling any statute of limitations. See IRC § 7811(d).

Criminal Investigation

Crime never stops, so CI never shuts down. The plan notes that “in recent years, the Shutdown Contingency Plan proposed that CI attempt to continue work on our 6,352 investigations with a reduced staff. During the implementation phase of the 2011 Shutdown Plan, it became clear that it was logistically impossible for CI to operate at a nearly 50% staffing level when the federal courts, federal prosecutors and our federal law enforcement partners were planning to continue their usual law enforcement operations.”

So all 2,745 Criminal Investigation employees continue to report.

The Most Important People At IRS

A third of the IRS employees who continue to work – 3,337 of them – are in “Information Technology.”

For example, 571 “IT Specialists…support application & web services operations necessary to prevent loss of data in process and revenue collections, application support for critical systems, manage code, perform builds, process transmittals, completion and testing of Filing Year programs.”

Another 62 are needed to “Support the IT filing season systems that operate the nation’s tax infrastructure are updated and in place for the processing of approximately 200 million tax returns annually.”

And 119 employees are required to “Provide 24×7 database support, including data storage, data replication and data backup and recovery for critical IT projects in Dev/Test/Prod/DR environments to continue to work deliverables and maintain all systems related to filing season preparedness, IT Security and IT support for Essential processes/employees.”

In the Mainframe Operations Branch (the “MOB”), 131 IRS workers, among other essential duties, “Provide critical 24x7x365 coverage to applications; Process tax returns, tax deposit and refunds; continue to process successfully on IBM and Unisys mainframe systems and to provide print and electronic documents support for internal and external customers; . . . The IDSE Section provides printed notices and letters to taxpayers, as well as both printed and electronic documents to internal customer.”

The Commissioner

Don’t worry about him, either. Like Chief Counsel, he is a “Political appointee who is not subject to furlough. The Commissioner’s salary is an obligation incurred by the year, without consideration of hours of duty required and is not placed in a non-duty, non-pay status.”

And he keeps his security detail, also. There are six special agents from Criminal Investigation who serve in that capacity (probably not more than two at a time).

 

Update on Obtaining Transcripts from the IRS

If you have been following the news from the IRS about the ability to obtain transcripts from it, you know that at the start of 2019 the IRS plans to make it harder to obtain transcripts. The Tax Section at the ABA has been working the issue to try to get the IRS to slow down the process to make sure that it has everything in place. The IRS has been moving relatively quickly in an effort to plug security concerns. Last December it cut off e-Services to everyone who was signed up and made them sign up again with enhanced security questions before allowing access. In August of 2018 in made an announcement about its intention to create a new improved system – improved from a security perspective and not from the perspective of ease in obtaining transcripts. In September 2018 it made a follow up announcement.

In the message reproduced below from ABA Tax Section Chief Counsel, Meg Newman, she provides an update of the ongoing efforts of the community to resolve issues of security versus access. This is an important message for anyone who regularly tries to obtain transcript information from the IRS.

Dear PBTC Community,

As many of you know, in August the IRS announced changes to transcripts including redacting Wage & Income (W&I) transcripts and an end to faxing any transcripts to representatives. The people at the IRS who have been working on this issue have real security concerns about the faxing process, but have also been sincere in listening to our concerns and have worked hard to address them. The Tax Section has been included in a working group to discuss potential ways for representatives to access unredacted W&I transcripts and other transcripts prior to CAF processing of POAs. On December 13, we submitted comments to the IRS summarizing our recommendations (www.americanbar.org/content/dam/aba/administrative/…).

Yesterday the IRS held a conference call and then released the attached fact sheet summarizing their decisions for how to address the concerns we have raised. The IRS was eager to get news out on this issue, and as a result some of the language in the fact sheet may be confusing. I clarified this morning with the IRS what they intended to convey. Here is a summary of the key points and some remaining issues.

  1. As of January 7, 2019, representatives who have a need for unredacted (the IRS calls it “unmasked”) Wage & Income Transcripts can call PPS and request unredacted transcripts be sent to their secure mailboxes through eservices (the “Secure Object Repository” or the “SOR”).
    • The standard for what qualifies as a need for an unmasked transcript includes return preparation.
    • The fact sheet outlines the steps for requesting an unredacted transcript be sent to your SOR and includes the option to fax a POA to the PPS representative if one is not already on file through the CAF Unit.
    • Taxpayers can currently (and also in the future) request that an unredacted transcript be mailed to their last known address with the IRS as well.
  2. Faxing of transcripts will continue until February 4, 2019 (originally scheduled to cease on January 2, 2019, they extended it about 30 days).
  3. At some point prior to February 4, the IRS will complete the process to enable PPS representatives to send all individual transcripts to a representative’s SOR when the POA has not yet cleared the CAF Unit (through the same process we currently use to request PPS fax transcripts to us). This process for new clients, and TDS or mail for clients with a POA on file will be the only methods for representatives to obtain transcripts going forward. Taxpayers can also request transcripts be mailed to their last known address.
  4. The IRS is referring to transcripts other than W&I as “masked” or “redacted” as well. I clarified with them that only that the taxpayer’s social security number will be redacted down to the last four numbers. They assured me nothing else about an account transcript would look different in the “masked” form.
  5. We are hoping to work with the Wage & Investment Division to establish some system to get student attorneys CAF numbers more quickly so they can create eservices accounts early in the semester to access transcripts. This is a work in progress and we will send updates if we make progress.
  6. Business transcripts that are currently available through eservices will also be available through the same method as individual transcripts prior to a POA processing (this is not what the press release said, but I confirmed it is the case and they will be updating their material). The IRS is still working out a plan to replace faxing for a number of “internal transcripts and prints” relevant to the representation of large business entities. This is likely not relevant to this group, but something the Section has addressed in the working group.

The crucial and immediate message here is that anyone who does not currently have an eServices account, should start the process of obtaining an eServices account now. Some people find they can successfully open an account in one session, while others will need to have an activation code mailed to them which takes 7-10 business days. For practitioners who have student attorneys working with you, this is even more important as you will need to make the students delegated users so they can create eServices accounts.

The Tax Section is still part of the working group on this issue, so please feel free to contact me offline (megan.newman@americanbar.org) if you have feedback or questions not covered here.

Thanks,
Meg
——————————
Meg Newman
Chief Counsel
American Bar Association Section of Taxation
(202) 662-8645
megan.newman@americanbar.org

via ABA Tax Connect, Dec. 20, 2018

Exonerees and TAPS

On giving Tuesday we write to offer you two ways to give back to the community in the tax area. The first opportunity is by taking a pro bono case to assist individuals who were wrongfully incarcerated. After release from wrongful incarceration, many of these individuals lived in states that paid the exoneree for the damage caused by the wrongful incarceration. At the time of payment, the money received was taxable income. Congress changed the law and retroactively excluded these funds from taxation in 139F. It has also opened up the refund statute to allow these individuals to get back the money paid before the law change; however, the open refund statute is about to close. We wrote about this two years ago seeking volunteers and readers of PT generously donated their time to assist the individuals who had been identified. More individuals have now been identified and another push is needed to assist them. Please read Kelley Miller’s letter below and respond to her if you are able to assist. 

In addition to the opportunity to assist by working on a case, we also write to ask that you assist by donating money to TAPS. This fund, created by the ABA Tax Section, provides money for fellowships to new lawyers to work in low income taxpayer clinics and other similar settings to assist low income taxpayers. In particular, it seeks to create projects that would serve as models to assist these individuals. At PT we have a regular portal through which you can give to TAPS (look on the side of the blog.) Today, we bring you a letter from one of our loyal readers who caused his firm to give to TAPS. We ask that you consider using the portal to have your firm do the same or to give individually. Keith

Helping Exonerees

Hello, Friends:

Two years ago at this time, we were working round the clock with Jon Eldan of After Innocence in San Francisco to file refund claims under Section 139F by December 18, 2016.  I am really proud of the results achieved to date for our extraordinary, pro bono exoneree clients, and am so grateful for all of the assistance that Keith and his students at Harvard have provided to this effort as well over the past two years.  This work has resulted in our doing additional tax-related, pro bono work for exonerees beyond the Section 139F claims.  We have worked closely with Jon Eldan and the Innocence Project Network over the past two years as the only group of tax practitioners working to assist Exonerees.  It has been incredibly important and significant work for us.

As you all know, the extender bill (which we provided much education on in terms of the normative refund statute) that was passed back in February gave us an additional two years from the original claim filing date.  Since that time, Jon and myself and a team of summer associates and volunteer attorneys from Reed Smith have worked to locate almost 300 remaining possible Section 139F refund claimants, including, many military exonerees (these individuals are those left from our search two years ago, where we worked to locate hundreds of other possible Section 139F refund claimants).  As a result of working to locate these individuals, preliminary review of each’s facts and circumstances, Jon informed me today of 12 potential pro bono refund cases to review and assist with by the deadline of December 17, 2018.

I am writing to ask for your help in either you or your firm assisting us in taking on one or more of these cases.

Many thanks to you all. Happy to answer any questions and I welcome your thoughts about this work.

Best,

Kelley C. Miller
Direct 215.851.8855 – Mobile 215.704.3046 – Fax 215.851.1420
kmiller@reedsmith.com

 

Helping Low Income Taxpayers Through TAPS

I have been a tax controversy lawyer since 1977.  I spent about 10 years with the Office of Chief Counsel, IRS, and have been in private practice since 1986.  Procedurally Taxing has become a staple of my daily reading.  If Procedurally Taxing charged a fee for access, we would pay thousands of dollars per year for access just as we pay for other tax publications.  I inquired about how to make a contribution towards Procedurally Taxing, and was advised to make a donation to the ABA Tax Assistance Public Service Fund (“TAPS”), which provides long-term funding for tax-related public service programs for underserved taxpayers.  I was able to convince my firm to make annual donations to TAPS.  An added perk is the TAPS donor sticker attached to your name tag at ABA Tax Section meetings.

As a result of reading Procedurally Taxing every day, I have come to appreciate that low income taxpayer clinics frequently litigate important tax controversy issues that otherwise would not be litigated because the dollar amounts at issue are very small or the chances of success at the appellate level are low or, frequently, both.  This is another important reason every tax lawyer should support TAPS.

If you too read Procedurally Taxing every day, I encourage you to step-up and convince your firm to make annual donations to TAPS.  If you are a tax controversy attorney and you do not read Procedurally Taxing every day, you should, unless you are a government attorney, in which case it is fine if you want to remain in the dark about cutting edge tax controversy issues.

Bob

Robert. R Rubin ●  Attorney ●  BOUTIN  JONES INC. ●  555 Capitol Mall, Suite 1500  ●  Sacramento, CA 95814

Annual Low-Income Taxpayer Representation Workshop

For the last several years, the ABA Section of Taxation Pro Bono & Tax Clinics committee has organized a Low-Income Taxpayer Representation Workshop in early December in Washington, D.C. Keith, Les, and I have all been involved with the committee and the workshop at various times over the years. The workshop is a nice opportunity for practitioners interested in low-income taxpayer representation issues to come together for an afternoon of learning and conversation.

This year’s workshop will be on Monday afternoon, December 3, at the D.C. offices of Morgan, Lewis & Bockius LLP. Workshop organizer Caleb Smith has lined up four hours of CLE/CPE with exciting speakers on important topics including section 199A, tax litigation, and collection due process. While the workshop is designed for practioners who represent low-income taxpayers through a Low-Income Tax Clinic or other pro bono program, all are welcome to attend.

Registration is a bargain at $30, reflecting the Tax Section’s commitment to supporting low-income taxpayer representation, and also Morgan Lewis’s generous hosting. (Shout out also to the workshop’s longtime past host McDermott Will & Emery.)

Preliminary Agenda

1:00 p.m. The 2017 Tax Act and Self‐Employed Workers
This panel will discuss new code section 199A as well as tax planning issues for self‐employed and “gig economy” workers in light of the changes made by the 2017 tax act. The panel will also discuss how these changes in the tax law will be reflected during the filing season on the draft 2018 Form 1040.
Moderator: Caleb Smith, Ronald M. Mankoff Tax Clinic, University of Minnesota Law School, Minneapolis, MN
Panelists: Joseph Tiberio, IRS SB/SE, Washington, DC; Caroline Bruckner, American University Kogod School of Business, Washington, DC; Lisa Sperow, Cal Poly Low Income Taxpayer Clinic, San Luis Obispo, CA.

2:00 p.m. Collectability as a Litigation Tool: Settling with DOJ vs. IRS
This panel will discuss taxpayer collectability as a factor in litigation with the Internal Revenue Service in pre‐assessment Tax Court cases, and with the Department of Justice in post-assessment District Court litigation. The panel will discuss differences in the IRS and DOJ approaches on how to treat a taxpayer’s collection potential as a factor in settling cases.
Moderator: Tameka Lester, Georgia State University College of Law, Atlanta, GA
Panelists: Valerie Vlasenko, Agostino & Associates, Hackensack, NJ; Erin Stearns, Director, University of Denver Low Income Taxpayer Clinic, Denver, CO; Carol Koehler Ide, Assistant Chief, Civil Trial Section, Tax Division, U.S. Department of Justice; additional panelists TBA

3:30 p.m. Break (no CLE/CPE)

3:45 p.m. New Trends and Tactics in CDP Litigation
This panel will discuss emerging trends in Collection Due Process litigation, recent precedential court decisions, and identify traps for the unwary.
Moderator: Omeed Firouzi, Christine A. Brunswick Public Service Fellow, Philadelphia Legal Assistance, Philadelphia, PA
Panelists: Keith Fogg, Director Harvard Federal Tax Clinic, Jamaica Plain, MA; Tom Thomas, University of Missouri, Kansas City; Steve Milgrom, Legal Aid Society of San Diego, San Diego, CA; additional panelists TBA

5:15 p.m. Networking Reception (no CLE/CPE)

Session on Tax Implications of Gig Economy At Tax Policy Center

On October 23 there was a conference at the Tax Policy Center on Taxing the Gig Economy. There were two panels, one on the size and scope of the gig economy and the other on tax administration issues.

Here is a link for those who would like to listen to the event. I recommend the entire conference, which runs about 2 hours and 40 minutes. The first part of the panel lays out the data around the size of the gig economy, including a slide deck presented by Michael Udell that lists out trends in self-employment income over the past thirty years. The part that I found most interesting was the discussion of tax administration issues that begins at about 1 hour and nine minutes into the session.

The tax administration panel consisted of Dave Williams, Chief Tax Officer at Intuit, Nina Olson, National Taxpayer Advocate, Caroline Bruckner, a professor at American University who has written extensively on tax issues in the gig economy, and Pooja Kondabolu, who is the Senior Tax Policy Manager at Airbnb. It was moderated by Howard Gleckman, a senior fellow at Brookings.

A few of the highlights of the discussion included Intuit’s Dave Williams perceptively commenting on the lack of knowledge around tax issues among many of the service providers (e.g., Lyft drivers, Airbnb hosts), and how in the current environment many of the service providers simply do not know what they do not know. Professor Bruckner’s prior work Shortchanged lays out in great detail some of the difficulties facing sellers and service providers. Professor Bruckner recently testified in the Senate on some the issues she discussed on the panel (written testimony here). At the panel, she spoke about the possibility of changes to information reporting and dates for estimated payments to help people comply.

The National Taxpayer Advocate spoke about how the IRS could make the system better by facilitating compliance through a better and targeted use of technology for those who enter the tax system after getting an EIN, with things like wizards, email reminders about estimated taxes and the possibility of salient online account portals that could actually be used to help people comply.

What stood out to me in the discussion is how challenging some of the compliance issues are for self-employed taxpayers generally, and how there are many differing ways to improve the outcome. None of the measures alone however can work.

4th International Conference on Taxpayer Rights “Taxpayer Rights in the Digital Age: Implications for Transparency, Certainty, and Privacy”

The National Taxpayer Advocate asked us to announce the upcoming 4th International Conference on Taxpayer Rights and to alert readers not only to the conference, which has become an annual event, but to the opportunity to participate as a speaker at the conference and present a paper. Les and I both had the opportunity to participate as speakers in the first conference. He also participated in the second conference and I attended the third. The conference is an excellent chance to hear about the efforts to protect and improve taxpayer rights around the world. If you have thoughts and ideas about how taxpayer rights should be protected and improved, consider writing a paper and speaking at the conference. If you just want to listen to some interesting discussions on the topic, mark the date and note that the conference has been filling up and turning away interested attendees who signed up late. The balance of this post is taken from the official announcement of the conference and its call for papers. Keith

Taxpayer rights serve as the foundation for effective tax administration. Whether expressed through a taxpayer bill or charter of rights, or a declaration of human rights, governments have long recognized that providing taxpayers with assurances of fair treatment and respect, and protections against government overreaching, further voluntary compliance. Current research is exploring the extent to which procedural justice encourages taxpayers’ willingness to comply with tax laws and obligations.

Since November 2015, the National Taxpayer Advocate of the US Internal Revenue Service has convened 3 international conferences to bring together scholars, taxpayer representatives, tax administration officials, and taxpayer ombuds/advocates, and provide a forum for a multi-disciplinary discussion of the operation of taxpayer rights in theory and practice. Videos and abstracts or papers from past conferences are available at taxpayerrightsconference.com. The 3rd International Conference on Taxpayer Rights, held in Amsterdam, The Netherlands, hosted by the International Bureau of Fiscal Documentation (IBFD) and sponsored by Tax Analysts, was fully subscribed by 160 attendees from 42 countries.

The National Taxpayer Advocate will convene the 4th International Conference on Taxpayer Rights on May 23 and 24, 2019, in Minneapolis, Minnesota. The conference is hosted by the University of Minnesota School of Law and sponsored by Tax Analysts, with technical assistance from IBFD. The 2019 conference will explore the role of taxpayer rights in the digital age, and the implications of the expanding digital environment for transparency, certainty, and privacy in tax administration.

We are currently seeking presentation and paper proposals on a range of topics. In developing proposals, the conference encourages proposals from multiple disciplines (e.g., from the fields of law, economics, psychology, anthropology,

sociology, computer science as well as from government officials and ombuds and taxpayer advocates) that address the following topics:

  • The existence and comparative analysis of taxpayer charters and taxpayer bills of rights around the world, and the foundation of taxpayer rights in human rights.
  • A comparative law analysis of the treatment of taxpayer rights, including under common law and civil law, with recommendations to establish some global common standards.
  • The impact of “big data” on the right to privacy in the context of tax administration, including a comparative global analysis of the judicial treatment of evidence obtained from leaked tax and financial documents.
  • The availability of administrative guidance (including the limits of legislative interpretation and interpretive guidance), its role in fostering compliance, and administrative or statutory vehicles for obtaining access to that guidance, as well as the methods to bring stakeholders into a constructive discussion with authorities and legislative bodies.
  • The ability of taxpayers to legitimately rely on published administrative guidance in its various forms, how such reliance is treated by tax authorities, the judiciary, and legislative bodies, and remedies for taxpayers when they relied on such guidance, to their detriment.
  • The role of “whistleblowers” in tax administration, including access to tax information, and protections for both the whistleblower and the subject taxpayer, with a comparative analysis of the approaches of different countries and other fields of law.
  • The impact of increasingly digital delivery of taxpayer assistance on vulnerable taxpayer groups, including the efficacy of different modes of communicating with taxpayers in order to promote compliance.
  • The ability of taxpayers to bring cases to court, especially in countries where taxpayers are either afraid of seeking assistance or relief, or are reluctant to bring a case against tax authorities because of cultural reasons.

PAPER SUBMISSION PROCEDURE:

To submit a paper proposal, please send the following information by December 1, 2018 to tprightsconference@irs.gov:

  • Author(s) name, contact information, and professional affiliation
  • Author(s) CV
  • Title of proposed paper
  • A 3 to 5 page abstract of the paper, in Times New Roman, 11 point, double spaced, left alignment.

Participants will be notified of their selection by January 1, 2019. Conference fees for presenters will be waived. Travel and accommodation assistance also may be available for academic presenters, courtesy of co-sponsors.

Post-conference opportunities for publication of original papers will be available, including in The Tax Lawyer and in Tax Analysts publications.

Important dates and deadlines:

Deadline for submission of abstracts: 01 December 2018

Notification of paper/presentation acceptance: 01 January 2019

Deadline for submission of slide presentations and updated abstracts: 15 April 2019

Deadline for submission of papers for publication in Tax Lawyer or by Tax Analysts 31 July 2019

Upcoming Appellate Arguments on Cases PT Has Blogged

Frequent guest blogger Carl Smith keeps us up to date with many items that he tracks. Carl is headed to Hawaii for a well-deserved vacation from his busy retirement but before he left he provided us with an update on a number of cases on which we have previously reported. Because we usually pick cases of some importance on which to write, it is not surprising that many of them continue on past the initial decision. For those interested in knowing what is happening on some of the cases on which we have blogged, Carl has left us with a guide to the cases moving forward to oral argument on appeal in the next couple of months.

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  1. The first case is one on which Les blogged here and here over two years ago. The issue in the case concerns the effect of fraud on the return by a third party and whether that fraud can hold open the statute of limitations even if the taxpayer did not commit fraud in filing the return. On Nov. 8, the 11th Cir. will hear the appeal of Finnegan v. Commissioner, T.C. Memo. 2016-188, in which the Tax Court held that the fraudulent conduct of a return preparer extended the SOL of 6501 indefinitely (per its Allen opinion).  The Tax Court refused to follow the Fed. Cir.’s BASR’s holding to the contrary, but which is possibly distinguishable as a TEFRA partnership case.  Frank Agostino will do oral argument for the taxpayers.  The DOJ argues that the Tax Court’s interpretation of 6501 is correct and that the taxpayers waived raising any argument that the Tax Court’s position in Allen is wrong. The briefs are here: Appellant; Appellee; Reply. We note in our earlier posts that fellow bloggers Jack Townsend and Bryan Camp think Allen is wrong. I happen to think it is right. Aside from obviously turning on the language of the statute, the issue is one of where should the focus lie. Should the IRS receive an unlimited time period within which to make an assessment because of the deceit on the return or should the taxpayer have a normal statute of limitations since the taxpayer did not engage in fraud even if the taxpayer benefited from the action. It would not be surprising to find that this issue eventually ended up in the Supreme Court.
  2. On Nov. 9, the 9th Cir. will hear oral argument in Crim v. Commissioner, one of the cases in which Joe DiRuzzo is arguing the Kuretski issue.  Carl blogged about the case here mentioning the forthcoming oral argument and providing links to the briefs. The Kuretski issue for those of you not following it closely involves the power of the President to remove Tax Court judges which raises issues of separation of powers depending on where the Tax Court lands inside the government. Is it a part of the executive branch as the D.C. Circuit determined in Kuretski making the removal provision constitutional sound or is it a part of one of the other two branches of government as signaled by the Supreme Court in an earlier case not involving the removal provision. Should the 9th Circuit decide to place the Tax Court in the Judicial or Legislative branch, this case to could end up in the Supreme Court.
  1. Any regular reader of PT knows that the most blogged about issue in 2018 involves the Graev decision and its many permutations. On April 4, 2018, Carl blogged about the RERI case which involves the application of IRC 6751(b) to penalties imposed on partnerships. On Nov. 9, the D.C. Cir. will have oral argument in this TEFRA partnership case, among whose arguments are that the IRS did not prove compliance with 6751(b).  This may result in getting a Court of appeals to accept the Tax Court’s holding in Dynamo Holdings that 7491(c) does not put the burden on the IRS to prove compliance with 6751(b) because TEFRA partnerships are not “individuals”.
  1. On Nov. 13, the 2d Cir. hears oral argument in Borenstein v. Commissioner. I blogged about this case here. The Federal Tax Clinic at the Legal Services Center of Harvard Law School together with the tax clinic at Georgia State filed an amicus brief in the Tax Court and again in the Second Circuit.  This case has to do with the Tax Court’s overpayment jurisdiction under 6512(b) in an odd fact pattern in which the taxpayer filed a late return seeking a refund. The timing of the refund falls into a legislative donut hole because she requested an extension of time to file her return.  The case will not have broad applicability though it is possible that others could fall into this potential trap. The issue requires parsing the language of the statute and discerning its meaning in the overall context of filing a late tax return which contains a refund claim.
  1. On Dec. 4, the D.C. Cir. will hear oral argument from Joe DiRuzzo (again) in the whistleblower case of Myers v. Commissioner. Carl blogged this case on May 21, 2018 in which he linked to the appellants brief and to the brief filed by the Federal Tax Clinic at the Legal Services Center of Harvard, but not the later-filed appellee and reply briefs).  The issue in this case concerns whether the IRS sent a valid determination letter to the whistleblower. In whistleblower cases the statute does not make clear exactly what must be sent to provide a ticket to the Tax Court. The IRS sent him by regular mail a series of letters, none of which said that he should file in the Tax Court if he disagreed.  After many months contacting various other people in government for help with his claim, Mr. Myers eventually took a flyer on filing a Tax Court petition.  The Court decided that each letter in the series had been a ticket to the Tax Court, and Mr. Myers had filed late — dismissing his case for lack of jurisdiction. Because Congress has created new jurisdictional bases for the Tax Court in whistleblower and in passport revocation without setting out the type and formality of correspondence that the IRS must send to provide the ticket to court, these types of cases are needed in order to sort out when to come to court. Because Mr. Meyers is pro se, he may be one of many unrepresented individuals who will struggle to pick the right correspondence if the correspondence does not clearly alert him to its importance as a ticket to court.