Helping build a better tax system

Hosted by Paul Bonner

Because of their training and experience, CPAs are rightly considered the foremost providers of tax services to taxpayers. Some CPAs also serve the taxpaying public at large — with appreciation for Congress's task to enact equitable tax laws and the IRS's job to diligently and fairly administer them — by recommending improvements to both. They can do so in many ways, but in this episode, we'll explore two paths: the AICPA's volunteer tax committees and a council directly advising the IRS's top leadership — from the experience of a longtime trailblazer, Jeff Porter, CPA.

What you'll learn from this episode:

  • The IRS Advisory Council's role as a forum for discussion between the public and IRS officials on salient tax administration issues.
  • How serving on an AICPA tax committee or technical resource panel can enable CPAs to engage with nationally recognized leaders in taxation while sharing valuable tax knowledge among themselves.
  • How CPAs can advocate both for sensible and equitable tax laws and for the IRS to receive the resources it needs to better administer those laws as a fully functioning, modern agency.

Play the episode below or read the edited transcript:


— To comment on this episode or to suggest an idea for another episode, contact Paul Bonner at
Paul.Bonner@aicpa-cima.com.

Transcript:

Paul Bonner: If you're a tax practitioner and ever thought you'd like to participate in advocating for tax policy and administration serving the needs of both taxpayers and the government, you might consider how professional organizations including the AICPA — and the government itself — invite that kind of involvement.

Hi, I'm Paul Bonner with the Journal of Accountancy and The Tax Adviser. In this JofA podcast, we'll learn from Jeffrey Porter, a CPA who heads a small practice in West Virginia, about how for many years he has advised the IRS, Treasury, and Congress from within the AICPA's volunteer tax committees — and found it professionally and personally rewarding.

Early this year, Jeff was named to the IRS Advisory Council, or IRSAC, which reports to the IRS commissioner on ways to improve taxpayer service and compliance and IRS operations. You can also find more information in this program's notes about IRSAC — which, by the way, is seeking nominations right now for 2023 — as well as how to get involved in the AICPA's volunteer tax committees and technical resource panels.

We'll hear from Jeff about his journey in helping to build a better tax system — right after this short word from our sponsor.

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Thank you so much, Jeff Porter, for being with us today, and I wonder if you'd start by giving us a general overview of where your tax journey has led so far.

Jeffrey Porter: I began practicing in 1979, and I came into a small practice in Huntington, West Virginia, that at that point was really just one gentleman. I practiced with him for several years, and the firm grew. I strategically decided I did not want to be a big firm, to grow to be out of my control, so for many years, I was the only CPA, and there were five or six other staff. Today, there are three CPAs including myself and five or six other kind of staff.

For reasons I'll probably mention later, I got very involved in the AICPA, and part of that was really driven by the fact that I was a sole practitioner. And I needed people that I could talk to, that I could rely upon, just like if you were in a big firm, you could walk down the hall and talk to someone about an issue. The AICPA became that group for me.

And I grew to love the committee structure; I grew to have so many mentors within the AICPA that you'll probably hear me, as we go through this today, just talking about how fond I am of the AICPA and how much of a difference it's made in my professional career and the things I've had the opportunity to do in life.

Bonner: Well, that's very gratifying to hear, and in the meantime, you've had a thriving tax practice there in West Virginia, I believe.

Porter: Yes, we've been very blessed. I mean, West Virginia, when I say we work with high-net-worth individuals, that's not the same thing as a high-net-worth individual in New York or Washington, D.C., but we've had a very, very stable client base for many, many years. A lot of these clients have been with us for 40 years, really before I started in this particular practice. So we've been very fortunate and very blessed, and my son now is a CPA, and he eventually will be taking over the practice.

Bonner: That could describe, I think, the trajectory of a lot of CPAs, and I'm sure a lot of people out there can relate. But your name came up in the news in January, and that's one reason I wanted to do this podcast, is because you were named to the IRS Advisory Council in January, and that's quite a bit different. Would you tell us a little bit generally about IRSAC?

Porter: IRSAC serves as an advisory body to the commissioner of the Internal Revenue Service. And that's strictly its function, so it doesn't report to Congress, it doesn't report to Treasury, it reports to the commissioner of the Internal Revenue Service. And its big event, big product, if you want to call it that, every year is this annual report that it puts together and provides to the commissioner, so most of the effort goes into creating that report.

Each of the members of IRSAC are on one of the subgroups, or one of the IRS divisions. I happen to be on Small Business/Self-Employed. What ends up happening is the BODs, the business [operating] divisions, may recommend some topics they would like some input on or some help on, that they think that the perspective of members of IRSAC or practitioners, and through the public, might be able to give them some insights on the best way to handle some of the issues that they're facing.

Other issues kind of percolate up through the members of IRSAC. And they bring it forward and say, "Hey, this is something we're interested in and we'd like to work on; is it something you would be interested in having our input on?"

I started in January; we've had a meeting in late January, and we just completed a meeting in April. Most of those meetings — the first one didn't, but I think the rest of the meetings — typically have a public piece of that, a public meeting. Usually, after two days of meetings, there will be a public meeting at the end. And the leadership of IRSAC will report out to the public as to what is going on, and then one of the issues that we did in April was we suggested or thought about what some of the topics we believed were going to be in the annual report that comes out in November.

Bonner: In November, OK, and that report will make recommendations, I think, to the IRS on administrative matters that can range the gamut, can't they?

Porter: Yes, it can be issues about how to improve taxpayer service. It can be issues about information reporting. It could be different compliance and administrative issues. A couple of the items that were approved in the public meeting that we had in April — which again, we're just beginning to process for the report, that were approved to be in it — there's going to be a section about the IRS funding issue, which everybody likes to talk about, obviously. Another section about reasonable cause and penalty abatement, and a section on late K-1s. Now, there'll be many, many more topics than that, and that's just two or three that I thought I might throw out there. I think there were five or six approved at this point, but it could be up to as many as 15 topics that will be reported on in the annual report.

Bonner: Are those the ones pertaining to the small business taxpayers?

Porter: No, those are overall, the section about IRS funding. So, they have a general report about issues that are bigger and more topical, like IRS funding issues, and then each of the particular subgroups have their own topics that they write on and put forth.

Bonner: I see, yeah, well, funding certainly has been a big discussion point in some of the congressional hearings I've been sitting in on virtually here lately. I understand you've testified in Congress five times, is it?

Porter: That is correct, five different times, all of them doing that on behalf of the AICPA.

Bonner: I see. I was just wondering if any of those memories stand out in your mind.

Porter: Yeah, there's a whole bunch of them that stand out in my mind. The very first time I testified, it was on the Mobile Workforce Bill, which the AICPA has pushed for many, many years. This was before — it wasn't Ways and Means; I forget which committee — but there was a congressman from New York there, and if you look at the Mobile Workforce Bill, one of the states that loses more than any other state is New York, for some fairly obvious reasons. So when it came time for the questioning, he started asking me questions that there's only one answer to.

And you could tell that he was leading me to his answer, not my answer. It's like, "So, Mr. Porter, do you believe in the Constitution of the United States?" Well, of course, you say yes.

"And do you believe that the Constitution gives the states certain rights?" And, of course, you have to say yes. And you're, like, clawing on the desk trying to not go down this road that he's taking you down, but then you end up doing what all good politicians would do, you just pivot back to your talking points and you don't answer his questions. But I learned something there: that they're out for their agenda; they're certainly not out for my agenda.

Another time we were testifying before the Senate Finance Committee when Max Baucus was chair at the time. And I was sitting between Nina Olson, the taxpayer advocate, and the IRS commissioner. And Senator Baucus came out, and he was really upset at the IRS about something that had happened to one of his constituents, so he started railing on the commissioner. And it was like he just kept pounding on him and pounding on him, and when he got tired of pounding on him, he'd look over to Nina Olson and say, "Do you agree with that, Ms. Olson?" And she, of course, would. And then he would start pounding again. It went on forever, and I kept scooting my chair further and further away from the commissioner, because I didn't know what was going to happen here at one point in time.

And then the last time I testified was before the Senate Small Business Committee, and this was personal because, as we were going through the security, we had about 15 minutes till time to testify. I got a text and a picture that my first grandson had been born, and so now I'm out in the hall looking at pictures. And [the AICPA's] Melissa Labant came back out, trying to find me, to see where I was at and what I was doing, because I was no longer focused on testifying.

All of it was on behalf of the AICPA, and professionally, those times of testifying and meeting with the IRS and Treasury and the different committees and the House and the Senate, were probably the highlights of my professional career.

Bonner: I can imagine, and being grilled by Congress — really, you don't forget that. Of course, the commissioner is used to it, I'm sure.

Porter: Yes.

Bonner: And handles it well, I think.

Porter: He does.

Bonner: So, did you always want to be in that kind of role, both with the AICPA and now with IRSAC? You could have just been there in West Virginia and done taxes and kept your head down, right?

Porter: For me, it started — and I'm throwing out dates that tell how old I am — I started attending the [AICPA] National Tax Conference in the 1980s. And those were the days when there were some bigger-than-life figures like Wilbur Mills, who was the chairman of Ways and Means, and Dan Rostenkowski [also a Ways and Means chairman]. And those gentlemen came and spoke at the National Tax Conference many, many times, and they piqued my interest. And I really got interested in the process of how tax administration worked and the process of how — we all know how a bill's created, then it goes through Congress — but the ins and the outs and how it really happens was fascinating to me.

So, at one of these conferences, they said, "Hey, if you'd like to be involved in this conference, here's how you do it." And I came back and applied for the Tax Education Committee, which was, again, part of the Tax Division at that time and oversaw this conference, because I wanted to be involved in it. And I was fortunate to get chosen for that, and I'm assuming it was because I was probably the first person from West Virginia that had ever applied, right?

Bonner: Could be.

Porter: So anyway, I got on and for 10 or 15 years I was on the National Tax Conference Steering Committee, which gave me the ability to meet these people now as they came through and to talk to them and to meet some of the leading people in the profession. And that, again, piqued my interest in tax policy and tax administration. So, then I went on to be — in the mid-1990s, I served on a Tax Simplification Committee, and we failed miserably, in the 1990s, in tax simplification, and we've failed every year since.

But, again, it was administration, it was policy, it was how to make the rules, and those types of things that really kind of floated my boat and got me excited. So, I was blessed to be able to go ahead and be on Tax Executive Committee and chair Tax Executive Committee. And I chaired the Tax Reform Task Force that was from, like, 2012 till 2017, leading up to when tax reform was passed, if you call it tax reform, in 2017.

And I had some fantastic mentors through that process. I think of a gentleman by the name of Don Longano, who worked the Hill for PwC, and Mark Peterson and Ed Karl with the AICPA, that taught me how to go up to the Hill and meet with the IRS and how to bring your points forward and how to advocate for what you believe in. Another one was David Lifson, that participated and did a lot of that type of stuff.

Again, it gave me an outlet from being a small-firm practitioner, to see the bigger picture, which you don't see if you're sitting here grinding out 1040s and 1120s all day long.

Bonner: Yeah, I can imagine it's a very much a collaborative process, which tax preparing can be, but it also can be kind of lonely, I suspect. And for people who are interested in the big picture of why taxes are the way they are, I can imagine it's — who might feel like they're getting a call to do that sort of work, what should they do?

Porter: Again, I'm going to show my bias: I think you should volunteer for a committee with the Tax Division of the AICPA. For me, you have the opportunity in these committees to meet some of the greatest minds in tax throughout the country. And it could be people from large firms or small firms, it could be someone from government or industry, or you could meet someone that's just a periods-and-methods person. Who would I know that's a periods-and-methods person, or they focus only on S corps. or partnerships?

But I can't tell you how many times I've picked up the phone when I've got an issue that I don't understand. And I can pick up the phone, and I can call someone. I had an issue with an S corporation qualified Subchapter S trust, and I wasn't sure what to do with it and how to do it, picked up the phone — sent an email, actually — this was just a couple of months ago — sent an email. And within 15 minutes, I was talking to one of the best minds in the country on that type of issue. You have an opportunity to learn a lot of issues and to learn a lot of things that you might not know just in your little practice, or big practice, as the case may be.

But you also have the chance to meet some really fantastic people that are tax people, that are more than willing to share their time and their expertise. And then there's all of the staff of the AICPA in the Tax Division — again, I talk about the Tax Division because that's predominantly where I've spent most of my time in the AICPA. Many of them have had a variety of experiences in practice and in life, and they're more than willing to share that type of information and help along the way.

Another great opportunity is to try to volunteer and be involved in some of the CPE conferences because, again, you have the opportunity to meet the speakers. Many of the great speakers throughout the tax industry come and speak at the AICPA conferences, and you get the opportunity to sit down and talk to them and learn from them. It is interesting. Again, I would advise people to, if you're interested in learning about policy or meeting good people or learning about interesting tax issues, volunteer for an AICPA committee.

Bonner: You mentioned some of the issues that IRSAC is tackling right now, but so much of our attention at the Journal of Accountancy and at The Tax Adviser has been covering concerns about the challenges that the IRS faces now, because of the pandemic partly, but also because of modernization needs that have gone unmet for decades. Does IRSAC have a role to play in pointing out the way forward for the IRS in these kinds of issues?

Porter: Yes, you can go back on the IRS website and find most of the IRSAC reports that they put out, annual reports that are put out every year. Last year, they had a section dealing with problems related to funding. There'll be another section this year dealing with problems related to funding.

From my perspective, it's the biggest issue the IRS has. They need multiyear, consistent, timely funding. I mean, how can you modernize your computer equipment and all of your technology if you're working on a one-year budget or if you're working on a continuing resolution that doesn't get passed until April, eight or nine months into your year? And then the funds have to be spent by October.

So, if that problem can be solved, and there's adequate, multiyear funding, most of these other issues can be solved because then you can hire enough people to man the phones, so the phones get answered. You can hire people to process the paper returns that are backlogged, you can come in with new types of technology that provides practitioners with the technology they need to be able to interact through a portal, to be able to get the kind of information you need. So, to me, the root problem of all this — and this isn't rocket science; probably, anybody would say — that it all comes back to adequate funding. And it needs to be multiyear so they can plan and they can implement and hire people that they know they can have the funding for, for a number of years.

So, yes, IRSAC has a voice in that. And again, our report only goes to the commissioner; we can't lobby Congress, we can't lobby Treasury, but we hope that our voice weighing in on the important issues gives the commissioner some fodder for his arguments.

Bonner: I've asked mostly about what volunteering in this way does for the practitioner, but what does it do for the taxpayer? There are particular issues of interest to taxpayers, and you have a chance to represent them at a whole other level now. What's an example of that?

Porter: Over the years — and I'm not sure if the public would consider this an issue particularly for them, but I remember back when the repair regs. came out. That was back in — gosh, I don't know, maybe early 2012, 2011, 2012, or something along that line. Many of us looked at that, and the AICPA, in particular, looked at that, and they were like, "This is too complicated; it's not going to be adequate, that the de minimis amount for small firms and small taxpayers is not going to be adequate." And the AICPA really went to bat, trying to push that number up, and they did; they were successful in getting that number pushed up. Now, is that something that general public is going to be jumping up and down about? Probably not. Some of the businesses probably, if they understand it, appreciate it.

So, I think IRSAC, and volunteering through the AICPA, I see this as not representing my clients, I see this as representing the profession and the public. We're there to try to help a better tax system, and if we could help a better tax system, maybe that will make it easier for individuals to file their own tax returns, or at least to interact through the system and get with the IRS and solve their problems.

Bonner: Well, that's where it touches millions of lives, isn't it?

Porter: Yes.

Bonner: Well, thank you so much, Jeff, for sharing this. Is there anything else you need to say to our listeners?

Porter: I would just hope that — you know, the people at the IRS are good people trying to do their job, just like all of us are trying to do our jobs every day. And while sometimes people get angry at them and they want to pound on them or yell at them on the phone, most of these people are just like you and me; we're doing our job every day, and we're trying to do it the best we can. So, understand that they're limited in some of the things they can do with issues that are out of their control.

Bonner: Well, a little forbearance goes a long way, doesn't it?

Porter: Yes, sir.

Bonner: Thank you so much Jeff, again, for joining us and giving us your perspective on these issues.

Porter: Thank you.

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