Executive Summary and Recommendations Submitted from the Chair of IRPAC
The Information Reporting Program Advisory Committee (IRPAC) was established in 1991 as a result of an administrative recommendation contained in the final conference report for the Omnibus Budget Reconciliation Act of 1989. The recommendation suggested that the Internal Revenue Service (IRS) consider “the creation of an advisory group of representatives from the payer community and practitioners interested in the Information Reporting Program (IRP) to discuss improvements to the system.”
The primary purpose of the IRPAC is to provide a public forum for the IRS and members of the information reporting community in the private sector to discuss relevant information reporting issues. This year, the IRS increased the number of members from 22 to 34. The additional 12 new members are on a three year term to work directly with the Office of Professional Responsibility (OPR). The remaining members of IRPAC have worked closely with the IRS to provide advice and industry experience on a wide variety of issues intended to improve the Information Reporting Program and achieve fair and equitable treatment of all taxpayers.
In addition to the new OPR sub-group, the IRPAC was restructured this year into four functional subgroups that focused on specific reporting issues. This allowed for issues to be discussed across operating divisions. The four new subgroups are: Burden Reduction, which looks at new tax forms as well as updated forms and their instructions with a keen eye toward reducing burden on the taxpayer, the tax form provider and the IRS; Emerging Compliance Issues, which reviews new and pending legislation and regulations from a usability standpoint; Modernization, which keeps a close watch on technological advancements; and Ad hoc, which addresses some very specialized aspects of the tax code, i.e. Pensions, Barter Associations. Each of these subgroups had carryover items as well as new items that were discussed throughout the year.
The IRPAC met four times in Washington, DC prior to the public meeting on October 29, 2008 to discuss, review and make recommendations on their items. Details of these items may be found later in this report under the respective subgroup headings. I would like to provide an overview of three (3) specific items that the IRPAC feels were of top priority for 2008. However, the order below is not prioritized.
The first item comes from our OPR subgroup.
The Office of Professional Responsibility (OPR) requested that the OPR subgroup review and provide comments on a penalty grid that OPR developed to indicate the range of sanctions that could be applied to non-filing and non-paying conduct by Circular 230 practitioners. The following recommendation is offered:
- Consider eliminating the existing grid in favor of providing guidance in the form of hypothetical’s that address different types of conduct potentially subject to Circular 230 sanctions. If the penalty grid is maintained, the OPR subgroup has additional recommendations.Please refer to the full report under OPR for those recommendations.
The second item comes from our Emerging Compliance Issues Subgroup.
IRPAC requests written guidance on whether Treas. Reg. § 31.3406(d)-1(b)(2)(iv)(A) requires an acquiring payer to re-solicit taxpayer identification numbers ("TIN") from each affected account holder when it acquires accounts from a third-party payer who has been making reportable payments subject to the Form W-9 certification requirements. On May 28, 2008, the IRPAC submitted this item for consideration and inclusion on the 2008-2009 Guidance Priority List (see appendix). The following recommendation is offered:
- A certified TIN should not be required to be re-solicited by the acquiring payer rather the selling payer provides the acquiring payer written notification of all pre-1984 accounts and their corresponding TINs, and all post-1983 accounts and corresponding TINs.Please refer to the full report for additional considerations with respect to the B and C Notices process.
The third item comes from our Modernization Subgroup.
The IRPAC Modernization Subgroup continued to focus on the concept of masking the Taxpayer Identification Number (TIN) on information returns, carrying forward this issue from the 2007 IRPAC Final Report. On May 28, 2008, the IRPAC submitted this item for consideration and inclusion on the 2008-2009 Guidance Priority List (see appendix. The following recommendation is offered:
- Work with tax filers, state agencies and practitioners to develop guidance to allow filers to display some form of masking TIN’s on Forms 1099, 1098, 5498 and W-2 sent to the recipient. IRPAC would be pleased to remain in consultation with PIPDS to help them prioritize any other forms that could be placed under this guidance.
I encourage you to review each of our full subcommittee reports and recommendations.
In closing, I would like to express my sincere gratitude to the employees of the Office of National Public Liaison (NPL) where The IRPAC program has resided for the past eight years. The administrative support provided by NPL is vital to the continued success of the committee. The IRPAC members wish to recognize the excellent service and support received from all the members of NPL, in spite of some of the changes we experienced in critical personnel. Without their help and coordination in setting agendas and finding the right people for us to meet, we could not have made the progress we have made this year.
Finally, I want to thank each one of my Committee members. They have generously taken time from their jobs, their practices, their lives and families to help improve our tax system. Their enthusiasm, openness, understanding and flexibility in a year of change have made our year successful. Thank you for your dedication and much success for the future years.
/s/ Karen Botvin
2008 Chair of IRPAC