NSA Federal Taxation Committee: Review, Recommend, Represent - the Role of the FTC

Article excerpt

The role of NSA's Federal Taxation Committee (FTC) is defined by the three "R's;" review, recommend, represent. The purpose of the committee is to monitor legislative and administrative federal taxation activities with respect to how they will impact NSA members and their clients; review Congressional bills, Treasury Department proposed regulations and IRS proposals; develop and present written comments, recommendations, and oral testimony at public hearings; and to represent the interests of NSA before the Internal Revenue Service and other government organizations relative to taxation matters. The FTC sets and administers, in consultation with the Society's elected leadership, NSA's policy relative to federal taxation issues.

In conjunction with its purpose, the committee has several goals. The primary goal is to seek and maintain a close working relationship between practitioners and the Internal Revenue Service. Other goals include proposing and promoting legislation deemed to be in the best interest of the practitioner; proposing tax legislation deemed to be in the best interest of small business; working toward simplification in all areas of taxation; and establishing and maintaining liaison with other practitioner organizations as warranted to advance the committee's objectives.

The objectives of the FTC, as listed in NSA Administrative Policy 20.1, include:

1. Review and comment in writing on select proposed rules and regulations promulgated by the Internal Revenue Service;

2. Testify before the IRS on select proposed regulations;

3. Testify before Congressional committees in matters pertaining to federal taxation;

4. Operate as an oversight committee to review against practitioners under the Internal Revenue Code, objective of determining if penalties are being justly imposed;

5. Review and comment on income tax returns and filing methods for individuals, partnerships, corporations and fiduciaries, as well as estate and trust returns;

6. Review and comment on information returns and filing methods.

History of the FTC

In 1965, NSA (then NSPA) joined other professional organizations supporting legislation to permit self-employed individuals to obtain benefits under a retirement plan. The legislation, originally introduced by Eugene D. Keogh (D-NY), became the basis for the Keogh plans that exist to this day. The increasing importance of NSA's comments about impending federal tax legislation led to the creation of the Federal Taxation Committee as a platform where NSA policy could be discussed and determined.

NSA's Committee on Federal Taxation was established in 1970, and its first chairman was Elmer F. Heckinger. The committee was charged with studying proposed changes to federal tax laws and regulations, suggested revisions of tax forms, and proposed changes in IRS rules and regulations. It also was charged with making appropriate recommendations to the Congress and governmental agencies and serving as a conduit for information to and from members about the nature and responsibilities of tax practice.

In 1971, NSA submitted comments on proposed IRS regulations regarding collection of withholding and Social Security taxes by employers. The Society made several suggestions on a number of issues, including the extension periods for filing Form 941 and estimated payments. The IRS followed many of these suggestions in the final regulations that became effective February 1, 1971. Also in 1971, NSA convinced the IRS to monitor tax advertising and to target misleading newspaper, radio and television ads. In response to this initiative, H&R Block agreed to modify its advertising and entered into a consent order with the Federal Trade Commission.

The Federal Taxation Committee has taken the lead in past years by proposing positions for NSA which were adopted by the Board of Governors. As early as 1971, the Board went on record endorsing legislation to protect the confidentiality of tax information. In 1975, on recommendations from the FTC, the Board of Governors adopted the official NSA position that, in the interests of protecting American taxpayers from incompetent and irresponsible tax return preparation, every federal tax return preparer who assists taxpayers for a fee be required to register with the IRS. NSA's eight-point proposal was in response to growing concerns among practitioners, the public and legislators about increasing dependence on commercial tax preparers.

In 1976, the House of Representatives introduced legislation to create a nonpartisan Commission on Tax Revision to review the nation's tax laws. NSA, with the advice of the FTC, was there to comment on a tax reform bill that addressed negligence among tax return preparers. The next year, the Board of Governors resolved that NSA "respectfully requests the Commissioner of Internal Revenue to mandate all IRS District Directors to set up...liaison committees" composed of members from the public, accounting and legal professions, and the IRS to create a dialogue to insure just, equal and objective application of tax laws throughout the United States. Another FTC initiative in 1984 recommended "all persons admitted to practice before the Internal Revenue Service should be treated equally with respect to their demonstration of continuing competency in federal tax matters."

And in 1990, NSA officially adopted a position recognizing the complexity and burden on both individuals and businesses that are imposed by governmental requirements for submission of various reports and forms. "NSA supports reasonable efforts by Congress to simplify and minimize reporting requirements."

In the past few years, NSA representatives have testified before Congressional committees on such matters as the Taxpayer Bill of Rights II, revision to Circular 230, tax systems modernization, the impact of Federal regulations on small businesses, tax simplification, and tax law noncompliance.

Current FTC Members

Members of the Federal Taxation Committee are appointed by NSA's elected President and serve a one-year term. The committee generally meets on a regular basis and on an ad hoc basis as required. In addition, committee members may attend certain IRS meetings as they occur during the year, such as the recent joint IRS, Treasury Department and National Performance Review study on customer service issues. Also, committee members must be willing to respond to requests from the Federal Affairs Department for comments on various IRS proposed regulations, surveys, and proposed tax legislation. Committee members also have input into the development and presentation of written and oral testimony before public hearings at IRS and before Congressional committees.

The current Chairman of the FTC is William Stevenson, Ed.D. Dr. Stevenson is president of National Tax Consultants, Inc., a firm that concentrates on taxpayer representation before the United States Tax Court and the Division of Appeals. He is also president of Financial Services of Long Island, a multifaceted tax preparation and accounting firm that services individuals and small business. He is an Enrolled Agent, a certified financial planner, and is admitted to practice before the United States Tax Court. In 1995, Dr. Stevenson testified on behalf of NSA before the House Ways and Means Oversight Subcommittee regarding proposed revisions to the Taxpayer Bill of Rights. He recently completed a two-year term as NSA's representative on the IRS Commissioner's Advisory Group (CAG). During the '97 filing season, Dr. Stevenson hosted members of the National Commission on Restructuring the IRS for an "up close and personal look" at electronic filing procedures. The current FTC Vice-Chairman is Roger N. Harris, of Athens, Georgia. As president of Padgett Business Services, Harris has become an expert on the issues small business owners face, from start-up through expansion. Padgett has grown to over 400 franchises throughout the U.S. and Canada, providing accounting and financial guidance to service and retail businesses with fewer than 20 employees. Mr. Harris is enrolled to practice before the IRS and is an Accredited Tax Advisor (ATA) and Accredited Tax Preparer (ATP) through the Accreditation Council for Accountancy and Taxation (ACAT) program. Representing NSA, Harris testified twice before the National Commission on Restructuring the IRS, advocating the interests of small business and advising the IRS on how to better manage the "business" of collecting taxes and providing taxpayer services. Most recently, he testified on behalf of NSA before the House Ways and Means Oversight Subcommittee regarding taxpayer protections in H.R.2292, The Internal Revenue Restructuring and Rearm Act of 1997.

An ex officio member of the FTC committee is NSA's current representative to the Commissioner's Advisory Group, Rick E. Oelerich. Oelerich is president of Oelerich & Associates, P.C., of Davenport, Iowa. He is an Enrolled Agent, an ACAT accredited tax advisor and tax preparer, and is a licensed Accounting Practitioner in Iowa. He was president of the Accountants Association of Iowa in 1992-1993 and currently is chairman of their Legislative Committee. He also has worked extensively with the Iowa District Directors Advisory Group, spending considerable time on numerous issues affecting both the IRS and the public.

Other FTC committee members for 1997-98 are: Robert T. Zaleski, Plymouth Meeting, PA, immediate past chairman; William F. Delaney, Westwood, MA; Bryan E. Gates, Clearwater, FL; Robert D. Householter, Medicine Lodge, KS; Louis Mirman, Virginia Beach, VA; Glenn A. Morton, Naples, FL; and Donny J. Woods, Nashville, AR, Governor Liaison. Les Shapiro, NSA's General Counsel, and Mary Turville, Tax Manager are staff liaison to the FTC.

The Year in Review

Throughout last year, the FTC focused on the National Commission on Restructuring the Internal Revenue Service and the many opportunities for public comment that it provided. In January, FTC member Roger Harris appeared before the Commission to address issues surrounding the Taxpayer Advocate. He focused on NSA's viewpoint that there is a basic conflict inherent in the Taxpayer Advocate's position. The Taxpayer Advocate must have lengthy experience at IRS and an intimate knowledge of the agency's workings to be able to quickly and easily deal with taxpayer problems. Yet despite a close connection to the IRS, the Taxpayer Advocate must be able to see the taxpayer's side of the situation and be ready and willing to place the needs of the individual taxpayer above the needs of the Service.

Harris testified again in April before the Restructuring Commission, describing problems with consistency at IRS. His testimony pointed out that in the past, the acceptance rate for offers-in-compromise varied throughout IRS districts from a low of 3% to a high of 79%. NSA recommended that some type of outside advisory board be created to evaluate successful district programs for possible expansion to the national level and to help manage change within the agency.

Later in the Spring, FTC member Rick Oelerich testified on behalf of NSA before the Restructuring Commission at a May hearing in Des Moines, IA. He faulted IRS on basic communication issues, citing lack of adequate training for many lower-level IRS employees and complicated language in IRS notices that taxpayers cannot comprehend.

Once the Restructuring Commission's proposals were introduced as legislation, NSA continued to comment. Testimony delivered in September before the House Ways and Means Oversight Subcommittee addressed recommendations of the Restructuring Commission on expansion of electronic filing of tax returns and taxpayer protections and rights. The testimony in its entirety is available on NSA's Fax-on-Demand system, document #1515 (ELF) and # 1516 (taxpayer rights).

At its Spring '97 meeting, the FTC approved several initiatives, including:

* opposition to additional preparer penalties and "certain due diligence requirements" with regards to the Earned Income Tax Credit.

* support of the implementation of the Electronic Federal Tax Payment System (EFTPS), but with a small depositor exception and a moratorium on imposition of penalties.

* support for S.460 and H.R. 1145 (later enacted, with modifications, as the Taxpayer Relief Act of 1997) provisions regarding full deduction of health care costs by the self-employed; liberalizing the home office deduction rules; and clarification of the independent contractor rules.

* support for an increase in the Estate and Gift Tax Unified Credit to reduce the amount of a decedent's estate that is subject to the estate tax.

* opposition to proposed amendments to the regulations under IRC Section 1402 which require that 100% of the distributive share of income for those other than limited partners be subject to self-employment tax.

Other issues currently under study by the FTC are: elimination of the preparer's Social Security number from returns and substitution of an alternative identification system; additional revisions to Circular 230; revisions to the Internal Revenue Manual; a proposed tax practitioner's bill of rights; changes to the electronic filing program; the marriage penalty; clarification of the independent contractor rules; joint and several liability; and reform of the tax code and alternative tax systems.

Comments Encouraged

Any NSA members who would like to submit comments for consideration by the FTC may send them to the attention of either Les Shapiro, General Counsel, or Mary Turville, Tax Manager, at FAX (703) 549-2984.