IRS Releases Tax Administration Recommendations

by Leroy Baker, Tax-News.com, New York

22 November 2010

The United States Internal Revenue Service Advisory Council (IRSAC) issued its annual report during a public meeting held in Washington, proposing a series of recommendations on a wide range of tax administration issues.

The primary purpose of IRSAC, which draws its members from the tax professional and academic communities, is to provide an organized public forum for senior IRS executives and representatives of the public to discuss relevant tax administration issues. It provides the IRS with important feedback, observations and suggestions.

In its report this year, the IRSAC has made several recommendations concerning, for example, electronic business returns with employer identification number (EIN)/name control mismatches; IRS implementation of uncertain tax position (UTP) reporting; the current filing requirements for foreign bank and financial accounts (FBAR); and the continued education program and sponsor requirements for tax return preparers.

IRSAC’s wage and investment subgroup’s report includes a review and makes recommendations on electronic returns that contained EINs that did not match the name controls used by the IRS in processing business and fiduciary income tax returns, while its large business and international subgroup reports on discussions regarding the newly-released UTP Statement, and highlights where specific clarification is needed in its regard.

The small business/self-employed subgroup has reviewed several difficult issues, the most significant of which is the FBAR report. Their report proposes simplifying voluntary compliance and addresses the challenges of international tax administration with respect to the FBAR report. In addition, the sub-group’s report contains recommendations regarding enhancing the effectiveness of collection efforts.

Finally, the office of professional responsibility subgroup’s report examines the new tax return preparer registration requirements, specifically focusing upon the definition of a “return preparer.” The subgroup also reviews the proposed provisions affecting education providers.

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