Compliance 2000

Article excerpt

The National Society of Public Accountants was recently invited by the House Committee on Government Operations to provide testimony on the Internal Revenue Service's new Compliance 2000 program. NSPA's statement appears below.

Good Morning. My name is Donny J. Woods. I am a public accountant from Nashville, Arkansas. I have been in public practice for 12 years. I am enrolled to practice before the Internal Revenue Service.

I appear before you today as Chair of the Federal Taxation Committee of the National Society of Public Accountants. NSPA represents some 21,000 independent accountants who provide accounting, tax preparation, tax planning, financial planning and managerial advisory services to an estimated 4 million individuals and small businesses nationwide.

Through its ongoing liaison activities with the IRS, the National Society is very familiar with the concepts and strategies comprising Compliance 2000. Moreover, because of the nature of its membership, NSPA is in a unique position to comment on the likely impact of Compliance 2000 on Main Street, U.S.A. - its small businesses, senior citizens and working families, struggling to make ends meet. We therefore greatly appreciate this opportunity to present today our views as to both the risks and the rewards of Compliance 2000.

We have organized our remarks around the four specific areas of concern outlined by Committee Chairman Barnard:

1. New approaches to compliance;

2. Treating taxpayers as customers;

3. Educating taxpayers; and,

4. Publicizing Compliance 2000.

New Approaches to

Compliance

As a matter of general principle, NSPA enthusiastically endorses the basic premise behind Compliance 2000. We can attest first-hand to the accuracy of IRS Commissioner Shirley D. Peterson's recent statement that, "a good part of what we call non-compliance . . . is caused by the taxpayer's lack of understanding of what is required in the first place." As practitioners, we know how difficult it is for professionals to find answers to far too many tax problems. For the average taxpayer, then, the tax laws are nothing short of overwhelming. Compliance 2000's attempt to address this situation is both commendable and appropriate.

Recognizing that many of the barriers to voluntary compliance are erected by the system and not by those who participate in that system, is an important and necessary new direction in tax administration. For example, when approximately one-third of the nation's employers are assessed penalties for failing to comply with Federal tax deposit rules each year, one must question whether it is the taxpayer or the rules that are at fault. Thus, NSPA would view the recent regulations proposed by IRS to simplify this area of the law as a logical application of Compliance 2000 principles.

At the same time, NSPA believes that it is important to acknowledge that there are risks associated with Compliance 2000. Perhaps our greatest concern for the success of Compliance 2000 relates to the ability of the IRS to "get the word out" within the organization.

The Internal Revenue Service is fortunate to have a talented, dedicated and sincere cadre of senior officials who are, in our view, absolutely committed to the fundamental changes in tax administration which Compliance 2000 entails. However, the Service is an enormous and highly de-centralized organization. It is our perception that too many "rank and file" IRS employees have still failed to grasp the changes in approach dictated by Compliance 2000.

Perhaps a specific example will illustrate the point. Recently, the NSPA offices received a phone call from one of our members who had successfully negotiated an installment agreement with IRS on behalf of a client. The third payment under the agreement was due, so the practitioner sent the payment to the local collections officer in charge of the case. …