In a recent interview with the JofA, Deborah M. Nolan, CPA, IRS Deputy Commissioner of the Large and Mid-Size Business (LMSB) division, spoke of the service’s strategic goals that would make filing returns easier and increase fairness of compliance enforcement.
When asked specifically how she planned to improve matters for the average business taxpayer, Nolan said that the IRS “used to approach compliance from an enforcement mode”—that is, three to five years after the returns were filed, it would have audit teams examining returns.
“Now the approach is proactive. It is based on a higher degree of trust and partnership with the practitioner community, and we now deal with tax administration in a proactive way. Suppose, for example, there is an area of tax law that is controversial: We examine the problem promptly to see if compliance could be effected, then engage the practitioners and the taxpayers in a dialogue. We suggest alternatives like prefiling, providing either case-specific or generic guidance to try to get an agreement with the taxpayer before the actual filing of the return.”
Nolan added that, to achieve the goal of fairness in compliance enforcement, the IRS has three objectives: to service all taxpayers, increase productivity through quality and ensure integrity of the process. “When we talk of ‘fairness in compliance,’ we wish to assure all taxpayers that they will be treated fairly, consistent with others similarly situated.”
Nolan said the LMSB division has been conducting seminars both for practitioners and for its own employees with the objective of reinforcing IRS goals. In a recent seminar, Commissioner Larry Langdon emphasized early resolution of pending cases. James Dougherty, a director in Deloitte & Touche LLP’s tax controversy services division and a member of the AICPA tax practice and procedures committee, who was a panelist at that seminar, said the constant refrain was “Resolve cases expeditiously.” He added that some participants at the seminar called for audits that were issue oriented, not time oriented. The consensus at the meeting was that the IRS should quickly define the elements of the case and resolve specific issues so taxpayers would not have to wait two years to close a case.
Earlier this year, the IRS had reorganized into four operating divisions—Small Business/Self-Employed, Wage and Investment, and Tax Exempt/Government Entities, as well as the LMSB. (For more about the LMSB division, see Tax News, JofA, Aug.00, page 81).