Role of Tax Professionals In Achieving Improved Tax Compliance

1
Role of Tax Professionals In Achieving Improved
Tax Compliance

• Mark W. Everson
• Commissioner of Internal Revenue
• United States of America

2
IRS Strategic Plan Goals

• Improve Taxpayer Service
• Enhance Enforcement
• Modernize the IRS Through Its People, Processes
  and Technology

3
Enhance Enforcement of the Tax Laws

• Key Objectives
• Discourage and deter noncompliance with emphasis
  on corrosive activity by corporations,
  high-income individual taxpayers and other
  contributors to the tax gap
• Ensure that attorneys, accountants and other tax
  practitioners adhere to professional standards
  and follow the law

4
Enhance Enforcement of the Tax Laws(continued)

• Detect and deter domestic and off-shore based tax
  and financial criminal activity
• Deter abuse within tax-exempt and governmental
  entities and misuse of such entities by third
  parties for tax avoidance or other unintended
  purposes

5
Role of Tax Professionals in the US

• Over 1.2 million tax professionals help US
  taxpayers understand and comply with their tax
  obligations
• Paid return preparers used by over 50 of
  taxpayers
• Many are not regulated

6
IRS e-Services Support Tax Professionals

• New e-Services offer tax professionals an
  efficient way to receive and exchange information
  with the IRS
• Obtaining tax transcripts
• Filing Powers of Attorney
• Resolving accounts electronically

7
Erosion of Professional Standards

• Vast majority of professionals follow the law and
  support tax compliance
• Notwithstanding a general commitment to ethical
  behavior, standards eroded in the 1990s
• Growth of abusive transactions developed and
  promoted by tax practitioners
• Number of steps taken by the IRS to re-establish
  high professional standards

8
Office of Professional Responsibility (OPR)

• OPR sets and enforces professional standards for
• Attorneys
• Accountants
• Enrolled Agents
• In-house counsel
• OPR does not currently have jurisdiction over
  other tax return preparers

9
OPR Revitalized

• Recruited new OPR leader Cono
  Namorato, a prominent former prosecutor and
  defense counsel
• Increased OPR staffing
• Better utilization of existing disciplinary tools
• OPR is actively examining misconduct issues
  involving major law and accounting firms and
  their role in abusive shelters

10
Regulatory Actions to Address Abusive Practices

• Additional standards for written advice
• Specify form and content of opinions used for
  penalty protection
• Include best practices for advisors
• Allow firms to be held responsible if no internal
  controls exist to ensure compliance
• New standards build on recent victories in court
  on false claims of privilege
• Next revisions to professional standards will
  address broader ethical issues

11
Enforcement Initiatives Promote Compliance with
Professional Standards

• Parallel proceedings coordinate criminal, civil
  and OPR actions
• Traditional approach of suspending other actions
  until criminal review is finished no longer works
  as abusive practices can be promoted over the
  Internet

12
Enforcement Initiatives Promote Compliance with
Professional Standards

• Son of BOSS settlement set tough terms on a
  clearly abusive transaction
• Participants required to pay full amount of tax,
  plus a penalty
• 1,165 taxpayers accepted the offer, over 3½
  billion paid to date

13
Recent Congressional Action Strengthens IRS
Regulation of Professionals

• Tax professionals subject to monetary fines, up
  to the gross income derived from the misconduct
• Firm may be fined if it knew or should have known
  of misconduct
• Monetary penalties may be imposed in addition to
  or in lieu of limits on practice privileges

14
Pending Legislation Concerning Practitioners

• Expand OPR jurisdiction to include tax
  return preparers
• Open OPR proceedings to public
• Require disclosure of Refund Anticipation Loans
  terms

15
US Internal Revenue Service

• Taxpayer Service and Enforcement Measures

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