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Monthly Archives: April 2012

IRS Preparing for the Future – Remarks From the Commissioner of Internal Revenue Douglas H. Shulman

WASHINGTON ― As IRS Commissioner, I am the head of a 100,000 employee financial services institution that processes over $2.5 trillion annually for over 200 million individuals, businesses, and non-profits.

So today, I wanted to share with you some of the results of four years of relentless focus on a handful of strategic priorities we set for the IRS. The priorities are:

Creating new capabilities and efficiencies through technology• Rethinking and reimagining the IRS’s relationship with paid tax return preparers
Leveraging data analytics for continuous improvement• Enhancing our taxpayer service capabilities
Transforming the agency to confront the challenges of a global economy, and
• Positioning the IRS workforce to make sure that we are prepared for tomorrow’s challenges.

Let me begin with our efforts to modernize our technology, and one critical program in particular that’s called the Customer Account Data Engine – or CADE2.

I am pleased to report that this year the IRS successfully migrated from a weekly processing cycle to daily processing. This was a multi-year, incredibly complex undertaking that went to the heart of systems that process trillions of dollars in tax revenue. This is an incredibly important milestone for the IRS, one which we first set our sights on in the late 1980s. Our next major priority is leveraging data analytics in order to continually improve our operations.

Let me now talk about how the IRS is managing its responsibilities in an increasingly global environment. Both corporations and individuals operate in the global economy. For example, many individuals have global exposure through their investments and 401Ks. Yet, this fundamental shift to a more global economy has created a real set of challenges for the IRS. On the individual front, we have made putting a big dent in offshore tax evasion a major priority.

We view offshore tax evasion as an issue of fundamental fairness. Wealthy people who unlawfully hide their money offshore aren’t paying the taxes they owe, while schoolteachers, firefighters and other ordinary citizens who play by the rules are forced to pick up the slack.

So, we are very pleased that through the end of 2011, we’ve had approximately 33,000 voluntary disclosures from individuals who came in under several special programs we started in 2009. To date, these individuals have paid back taxes and stiff penalties amounting to more than $4.4 billion, and the number continues to grow. We are now mining the information we have received to date and have launched our next wave of investigations on banks, bankers, intermediaries and taxpayers.

We have fundamentally changed the risk calculus of taxpayers who are thinking about hiding their money overseas, and we are well on our way to deterring the next generation of taxpayers from using hidden bank accounts to cheat on their taxes.

We are also moving from information sharing to more coordinated action among government tax authorities on a global basis. I’m the chairman of the main global body of tax authorities, which is comprised of my counterparts from 43 nations, including those from all G20 nations.

We have stepped up our coordinated efforts on offshore tax evasion by individuals, and have embarked on a project to conduct joint audits of certain multinational companies – which should reduce administrative burden on a company and help increase compliance.

Read more at: Tax Times blog

IRS Extends Time for Manager Meetings on Audits

The time for examiners to conduct a Group Manager Concurrence Meeting as part of a tax audit has been extended from 14 days to 30 days, the Internal Revenue Service said in a memorandum (SBSE-04-0312-023 ) to agents.

This interim guidance memorandum is being issued to Examination personnel to advise the requirement to conduct a GMCM has changed from no later than 14 business days to no later than 30 business days after completion of the initial appointment. This change is effective immediately. Please ensure this information is distributed to all affected employees within your organization.

The GMCM provides the examiner and the manager an opportunity to discuss the scope and depth of the examination, as well as the mutual commitment date, resulting in fewer delays, increased efficiency, and higher quality of examinations.

This guidance will be incorporated into IRM 4.10.3, Examination Techniques, and IRM 1.4.40, SB/SE Field and Office Examination Group Manager, by March 16, 2013.

Read more at: Tax Times blog

Colorado Sales and Use Tax Reporting Requirement for Out-of-State Retailers Struck Down By Colorado Judge

A federal judge in Colorado struck down March 30 as unconstitutional a reporting requirement imposed on out-of-state vendors that do not collect and remit state sales and use taxes (Direct Marketing Association v. Huber, D. Colo., No.1:10-CV-01546-REB-CBS, order 3/30/12).

Judge Robert E. Blackburn of the U.S. District Court for the District of Colorado said that Colorado's 2010 “Amazon” law, so called for one of the online retailers it ostensibly targets, violated the Commerce Clause of the U.S. Constitution.

The law, approved by the 2010 Colorado General Assembly (H.B. 1193), requires out-of-state vendors that do not collect state sales and use taxes to notify consumers they may have an obligation to pay taxes on remote purchases. The law also requires the vendors to report certain information about such transactions to the Colorado Department of Revenue.

Blackburn's ruling enjoins the enforcement of the act and related regulations against retailers that sell to Colorado customers but do not have a physical presence in the state.

His ruling came on cross motions for summary judgment filed by the Direct Marketing Association, the plaintiff in the case, and the Colorado Department of Revenue, the defendant.

Read more at: Tax Times blog