News Briefings - DC Highlights

5/8/2008 -- IRS plans to fill vacancies on advisory panel

IRS is seeking applicants from the tax professional community for membership on the Internal Revenue Service Advisory Council (IRSAC), a panel which provides advice and recommendations regarding tax administration. (IR 2008-69) The IRSAC membership includes tax attorneys, certified public accountants, enrolled agents, enrolled actuaries, appraisers, other tax professionals, as well as business representatives. The panel presents a report to the IRS Commissioner each year at a public meeting. "The IRSAC plays a vital role by ensuring that executives at the IRS have feedback about how our policies and actions affect the private sector," said IRS Commissioner Douglas Shulman. Applications will be accepted through June 6 for three membership openings that begin in January 2009. The commissioner appoints members for a three-year term. Additional information and applications are available at http://www.irs.gov/taxpros/article/0,,id=181791,00.html.

5/8/2008 -- Upcoming Web cast focuses on the "Electronic IRS"

The next Tax Talk Today Web cast, entitled "The Electronic IRS...more than just e-file," is scheduled for May 13 at 2 p.m. (ET). (IR 2008-67) The program, which will include a panel of experts, will provide up-to-date information on e-file, e-services and other electronic tools important to the practitioner community. Tax professionals in need of continuing education credits are eligible to receive one CEC by viewing the program. There is no cost to view the program and registration is available at http://www.taxtalktoday.com/.

5/8/2008 -- Report looks at ups and downs of individual income tax revenues

A new paper from the Congressional Budget Office (CBO) examined the up-and-down path of individual income tax revenues as a share of total economic output since '94. (Sources of the Growth and Decline in Individual Income Tax Revenues Since 1994, May 2008) Federal income tax revenues have "risen and fallen by significant amounts" over this period, CBO said. According to the paper, revenues increased by $461 billion (or 85%) between fiscal years '94 and 2000, fell by $211 billion (or 21%) between 2000 and 2003, and then increased by $370 billion (or 47%) between 2003 and 2007. Describing this period as "remarkable," the paper stressed there was a "dramatic change" in revenues relative to the gross domestic product (GDP). From '94 to 2000, income tax revenues grew by 85% compared with growth of 39% for nominal GDP. That growth increased the ratio of income taxes to GDP from 7.8% to 10.3%, "a historic high," CBO said. Over the next four years, individual income taxes "dropped precipitously," falling to 7% of GDP, a 50-year low, CBO said. In 2005, revenues began to rebound and rose to 8.5% of GDP by 2007. CBO cited three key factors that contributed to this situation--a rising and falling income tax base, a rising and falling effective tax rate on adjusted gross income, and tax legislation. The paper can be found at http://cbo.gov/ftpdocs/90xx/doc9076/05-02-TaxRevenues.pdf.

5/8/2008 -- GAO reports on VAT systems in five countries

The Government Accountability Office (GAO) has released the results of a study of five countries which use a consumption tax known as a value-added tax (VAT). (GAO-08-566) The study takes a close look at lessons learned regarding compliance risks, administrative costs, compliance burden and transition issues. As described by GAO, a VAT is levied on the difference between a business's sales and its purchases of goods and services. Typically, a business calculates the tax due on its sales, subtracts a credit for taxes paid on its purchases, and remits the difference to the government. GAO studied the VAT systems in give countries–-Australia, Canada, France, New Zealand and the United Kingdom. "Like other tax systems, even a simple VAT-–one that exempts few goods or services – has compliance risks and, largely as a consequence, generates administrative costs and compliance burden," GAO said. The report does not make any recommendations. It is available at http://www.gao.gov/new.items/d08566.pdf.

5/8/2008 -- Procedures on IRS economic burden cases must be revised

The Taxpayer Advocate Service (TAS) must improve the way it handles economic burden cases, the Treasury Inspector General for Tax Administration (TIGTA) said in a recent audit. (Audit Report No. 2008-10-088) Economic burden cases usually involve taxpayers who are requesting assistance because the action or inaction of IRS is creating, or has the potential to create, a financial hardship. According to GAO, in most economic burden cases, the taxpayer has asked the TAS to stop an IRS enforcement action or to expedite a process. "Given the potentially urgent nature of its cases, the TAS has been granted special authorities and tools to assist taxpayers who might have urgent financial needs," TIGTA said. "However, we noted significant inconsistencies in how these tools and authorities were used." For example, auditors found it difficult to determine why some cases were afforded priority handling and others were not. The audit also found that more than 50% of the cases sampled had errors and delays that might have burdened taxpayers. In addition, there was evidence of untimely actions, technical errors and procedural errors. "Further, some taxpayers might have had their rights or privacy violated because the TAS bypassed authorized representatives, made unauthorized disclosures to third parties, did not pay the proper interest on refunds, or denied claims erroneously," TIGTA said. The audit is located at http://treas.gov/tigta/auditreports/2008reports/200810088fr.pdf.