Meeting Minutes from the IRS/CT DRS Connecticut Practitioner Liaison Meeting - June 2017

June 15, 2017
IRS Practitioner Liaison Meeting Minutes
Gateway Community College, New Haven, CT
Time: 9:00a.m.-11:30a.m.
• Joseph McCarthy, Senior Stakeholder Liaison, IRS Stakeholder Liaison Field
• Mark Siegel, Group Manager, IRS SB/SE Examination Division
• Beth Gaudino, Revenue Agent, IRS SB/SE Examination Division
• Wendy Schnubel, Manager, IRS Collections Division
• Alisa Lebovitz, Local Taxpayer Advocate, Taxpayer Advocate
• John Biello, Deputy Commissioner, CT Department of Revenue Services
• Ray LaLuna, President, Connecticut Society of Enrolled Agents
• Ellen Lepak, Member Federal Taxation Committee, CT CPA
• Bill Sass, Member Federal Taxation Committee, CT CPA
• Steve LaRosa, Member Federal Taxation Committee, CT CPA
• Ralph Anderson, Member Federal Taxation Committee, CT CPA
• Rosemary McGovern, Member Federal Taxation Committee, CT CPA
• Dan Pannese, Member Federal Taxation Committee, CT CPA
• Steve Kaplan, Past Chair of Federal Taxation Committee, CT CPA
• Anthony Decaprio, Member, NY / CT Association of Tax Professionals
• Bob Williams, Director, NY / CT Association of Tax Professionals
• Les Grodd, CT ABA, Tax Committee
• Aaron Kriss, CT ABA, Tax Committee
• Dan Smolnik, Taxpayer Advocate Panel Member & CT ABA, Tax Committee
• Rose Luglio, Professor of Business, Gateway Community College

Meeting Summary

John BielloTax Division Chief, CT Department of Revenue Services
John discussed a number of different tax issues including new tax legislation which can be found at the following link: These legislative updates included: the regulation of non-credentialed tax preparers, requiring sales tax permits to be renewed every two years instead of every five, the order of applying payments (penalty / tax / interest), specifying methods for weekly sales tax remittance, requiring income tax withholding for pension and annuity payments and requires certain entities to file with DRS copies of the annual federal information returns that report the payment transactions they process for Connecticut retailers. In addition John talked about the proposed DRS Fresh Start (collections) Initiative law which has yet to be passed by the legislature.

Mark Siegel - IRS Examination Group Manager & Beth Gaudino - IRS Revenue Agent
Mark discussed the types of cases they are seeing in exam. They include National Research Project cases, Discriminant Function (DIF) cases and non-filer cases. National research cases are difficult for the taxpayer, examiner and the representative in that there are a large number of issues that are required to be examined. Mark has 10 Revenue Agents in his group, each agent has about 25 – 30 cases in their inventory. There has been a recent change in procedure for initial taxpayer audit contacts. As a fraud prevention measure, initial contacts for audits are now made by letter. Revenue agents are also working with taxpayers and their representatives to set a mutual commitment date for the end of the audit, after the second day of the initial appointment. Mark also discussed resolving disputes / issues. Issues are best resolved at the lowest possible level. With that in mind representatives should work with Revenue Agents first to resolve any disputed issues. If that does not work, representatives can request a meeting with a manager. If the issues cannot be resolved with the Revenue Agent or manager the taxpayer has the right to go to Appeals. Note: Appeals will only take case with a year or more on the statute. Taxpayers can also request fast track mediation to resolve issues without losing their appeal rights. See Publication 3605 for more information on fast track mediation

Wendy Schnubel - IRS Collections Group Manager
Wendy discussed a wide variety of topics including:
The workload of Revenue Officers and how the majority of a Revenue Officer’s work should be in the field and that Revenue Officers are doing more complex work while less complex collection cases are being worked by IRS employees in the campuses and in taxpayer assistant centers.
Staffing levels within collections. The number of Revenue Officers the IRS has decreased to 3547 in 2016. That is approximately a 40% reduction in the number of Revenue Officers in the last 6 years. The 3547 number includes both field Revenue Officers and campus Revenue officers.
FTD Early Interaction Initiative - The IRS is intervening earlier with employers who fail to make FTDs or make less than the required FTD deposits. This is being done to catch the taxpayer before their tax liability becomes too large and to increase the likelihood of getting the taxpayer back into compliance.

Alisa Lebovitz
- IRS Local Taxpayer Advocate
Alisa discussed the Taxpayer Advocate report to Congress. Connecticut currently has 6 Case Advocates. Each Case Advocate carries around 50 cases. The bulk of the cases (34%) relate to ID theft followed by EITC cases.
Alisa also talked about Passport revocations - Passports can be revoked for certain taxpayers who have large tax liabilities. Finally she discussed the Systemic Advocacy Management System or SAMS system and how the SAMS system is used by taxpayers and tax practitioners to report systemic issues to the Taxpayer Advocate. When submitting issues to the SAMS system, please do not include any taxpayer sensitive information.

Dan Smolnik - IRS Taxpayer Advocate Panel Member
Dan gave a brief summary of his work on the Taxpayer Advocate panel where his group is focusing on the EITC. Some important big picture facts about the EITC include: 27 million taxpayers received the EITC totaling $67 billion. 20% of taxpayers eligible for the EITC do not apply for it. Of those 20% 40% do not think they qualify and 8% doesn’t know the credit exists. There are 21 separate tests to qualify for the EITC. There is a high turnover in the number of taxpayers who qualify for the EITC. Find more details on the EITC.

Joe McCarthy - IRS Senior Stakeholder Liaison
Joe discussed tax practitioner data breaches; specifically hacking of remote access software and malware as the most common ways tax preparers have their client information stolen. He shared tips on how to better secure client tax data against hacking from remote access software and malware.
Steps to take in order to reduce the risk of having your client data stolen when using remote access software.
1) Use a strong password. A strong password has a minimum of 12 alpha, numeric and special characters. Remember strong passwords have to be used by everyone who has access to your client data.
2) Use layers of passwords. For example a strong password for your remote access software and a separate strong password for your tax software. In addition you should use strong passwords for other files containing client information stored on your hard drive.
3) Use password time out software; that is software that temporarily locks access to your computer when a password is repeatedly entered incorrectly.
4) Use geographical IP or internet protocol filtering software to prevent hacking from outside the United States.
5) Limit the number of hours your remote access software is available during the day. For example from 7:00 a.m. to 11:00 p.m.

Steps to take in order to reduce the risk of your computer infected by malware or ransomware or having your client data stolen.
1) Use a separate dedicated email address when registering or renewing your:
a. IRS Practitioner Tax Identification Number (PTIN)
b. Enrolled Agent
c. Electronic Filing Identification number (EFIN)
2) Open any emails in this separate dedicated email account with extreme caution.
3) Do NOT click on any links or attachments in the emails in this email account.

Joe also discussed other issues including:
Private debt collection - All taxpayers will receive written notices from the IRS explaining that their case has been turned over to a private collection agency and then receive a written notification from the private debt collection agency before they will be contacted by phone by the private debt collection agency. Taxpayers can request (in writing) that their case be transferred back to the IRS. Private debt collection agencies must abide by the consumer protection provisions of the Fair Debt Collection Practices Act.
Revenue Officer identification - How is the IRS protecting against scammers from posing as IRS Revenue Officers attempting to obtain payments from taxpayers? IRS Revenue Officers carry two different forms of identification: a commission and a “Smart ID” with an embedded chip. Both are photo ID’s. In addition local police departments have been given a toll free phone number by the IRS so that police can confirm a Revenue Officer’s identification.

Issues & Status

Issue – What are going to be the ramifications of the IRS losing the PTIN case?
Issue Status ReportSee the latest PTIN updates. This information was made available after the meeting. Note: the PTIN decision ruled against the IRS charging for PTIN registration process but did NOT rule against the IRS requiring tax preparers to have PTINs.

Issue – Limited staffing in Appeals is harming service. The current staffing levels are creating long wait times before a case is ever heard.
Issue Status Report – Since FY 2010 reductions to the IRS budgets have resulted in reduced staffing levels within the IRS. As a result the IRS has lost 20% of its employees over the last 6 years. The FY 2018 budget, as proposed, will likely reduce staffing levels even further.

Issue –The IRS budget must be increased.
Issue Status Report – The IRS budget for FY 2018 as requested would cut the IRS budget an additional $230 million to 10.9 billion. The IRS budget in FY 2006 was $10.8 billion.

Issue – Obtaining business lien releases so that taxpayers can borrow funds to grow their business and pay their tax liabilities are difficult to obtain. What can be done to get these liens released?
Issue Status Report – In many instances the IRS is unlikely to release a lien because the lien is there to protect the government interest. Releasing the lien might make collecting the tax liability less likely. Even the Taxpayer Advocate’s office has a lot of difficulty getting liens released.

Issue – Scam IRS calls to individual taxpayers and tax preparers continue to be a problem. Also scam phone calls requesting W-2 information from employers are a problem as well to a lesser extent. Scam phone calls and emails are being received on an ongoing and regular basis.
Issue Status Report – Scam IRS phone calls and emails can be reported to the IRS and the Treasury Inspector General for Tax Administration (TIGTA) by following the directions on the following link: Policy changes have been made that require the first contact by the IRS in exam or collections proceedings be in writing. The IRS will NEVER email a taxpayer requesting a payment or informing them of an audit nor will the IRS contact taxpayers using social media.

Issue – CT DRS – What is the CT DRS doing regarding income shifting between states?
Issue Status Report – The CT DRS is concentrating on that issue and has an audit initiative planned in the near future.

Roundtable & Comments

Meeting comments are included in the issues section of the minutes.

Next Scheduled Meeting

The next Connecticut Practitioner Liaison meeting will be held in January 2018.