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Priority Guidance Requests – Tis the Season

Posted on June 10, 2016

It’s the season to tell the IRS what things you would like it to focus on in writing regulations and other guidance in the coming year.  Each year, the IRS creates a plan for the guidance projects on which it will work and, prior to completing that plan, it invites the public, which generally means bar groups and other organizations with a stake in the outcomes, to weigh in on the items the IRS should address that year.  Just because something gets on the priority guidance list does not mean that the IRS will actually work on it because staffing issues, new legislation, Congressional investigations and other outside forces can cause the IRS to redirect its resources; however, not getting on the list almost guarantees that the IRS will not issue guidance on the issue in the coming year unless some outside force puts the issue front and center in the IRS enforcement actions.  For example, in the Microsoft litigation concerning summons enforcement and the use of outside experts, the IRS issued a regulation during a year despite the fact that the project was not on the priority guidance list because the IRS had a litigation reason to want the regulation issued at that time.

Recently, the ABA (American Bar Association Tax Section) and the ABA (American Bankers Association) sent in their priority guidance requests.  There are a couple of priority guidance projects suggested by each of the ABA groups that impact on procedure and merit brief discussion.

I will start with the Bankers because their request, while perhaps not the most important, is the most fun. You can find their request here.  The poor bankers have carried a financial burden for us all for over three decades in the form of the reimbursement they receive when responding to a summons request.  I guess that the bankers must never get subpoenaed to testify in court because then they would have even more to complain about. In the Tax Court the person who gets subpoenaed to testify gets the princely sum of $40 per day, paid in advance (unless you are subpoenaed by the IRS, in which case it does not get paid in advance and you will be paid when the IRS procurement officer in charge gets around to sending the check – hint to those waiting – don’t hold your breath for quick payment.) The Tax Court witness fee last changed in 1990 when it was raised from $30 to its current level, so it rivals, but does not defeat, the summons payment amount in longevity and out-of-touchness.

So, the bankers are unhappy that the IRS has started using its summons power with greater frequency and when it does it pays the bankers $8.50 an hour to do research in order to respond to the summons. The amount was set by regulation in 1983 and has not been updated since. Unless the IRS received a letter like the one the Bankers sent here, my guess is that the fee would not be changed for the next millennium.   That could explain why the fee for testifying has not been changed for so many years. There is no American Testifiers Association writing in to suggest an update to the Court in the fees that get paid to those who must come and testify. The Bankers make a valid point. Even if I may feel that they have the ability to absorb this small cost of doing business and even if I may think that their letter which details just how amazingly rich they are does not provide the best support for the relief they request, this is the type of letter that deserves attention and may work to make the IRS update the fees for working on summons cases.

The Tax Section of the ABA has a very formal process for gathering requests for priority guidance. Each year it solicits input from the 30+ committees in the section and rolls those recommendations into a request to the IRS. It has a format for making the request and reviewers who go over the requests to ensure that the requested guidance is important to the section and properly presented. The letter from the chair of the Tax Section is here.  Any committee of the Tax Section that wants guidance and fails to put its request on this list really misses the boat. The IRS carefully reads and reacts to the request each year from the Tax Section. This is an opportunity that should not be missed.

The requests coming from the Tax Section of the greatest procedural interest are its request that the IRS update its guidance in response to the losses it suffered in Loving and Ridgely. We have blogged on these cases here, here, here and here. It has now been a couple of years since the IRS lost. It is time for the IRS to update its guidance in this area. Including these items on the priority guidance list makes sense and may lead to updates in an area that has grown somewhat silent from a regulatory perspective. The IRS has pursued legislation to reverse Loving and it makes sense that it would not rush to rewrite the regulations taking into account the Loving decision while it attempted to get legislative authority to regulate the return preparer industry. Perhaps, it will continue to do so and will continue to hold these items off the priority guidance list. Given the Congressional response to date, it may be time to move on, at least temporarily, until a shift in Congressional thinking clearly manifests itself.

If you want to see guidance in a particular area, join the party and write a letter to the IRS providing your feedback. If you can make your request part of a group, it may carry greater weight. Certainly, requests that appear to push one party’s interest may go low on the list of guidance projects but nothing prevents an individual person from submitting a request. The IRS is listening.

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