The remarkable depth and breadth of Tax Executives Institute are, once again, confirmed by the Table of Contents of this issue of The Tax Executive. The reports on the Institute’s educational programs, the summary of chapter meetings around the word, and the reprints of technical submissions to government authorities — all of these demonstrate the singular nature of the Institute as the premier organization of in-house tax professionals in the world.
Region IX Shines
Consider first the reports on our local chapter meetings. This issue contains stories on two excellent meetings held outside North America. Last fall our Asia Chapter teamed up with the Tax Academy of Singapore — an organization founded by the Inland Revenue Authority of Singapore in collaboration with the Big Four and others — to organize a three-day conference on U.S. taxation.
The conference was everything one comes to think of in a TEI meeting: practical, professional, and effective. My congratulations to Sharon Tan, TEI’s Vice President-Region IX; Tony Fay, Asia Chapter President; Kristy Ton, the chapter ’s representative on the Institute Board of Directors; and everyone else in the chapter who contributed to the program.
Region IX also distinguished itself by holding the first TEI meeting ever in the Middle East. In January, the region held a two-day conference in Dubai. Again, Regional Vice President Sharon Tan was at the helm, and while leaders from the Asia Chapter contributed, the bulk of the planning efforts came from members of the EMEA Chapter. (The “ME” in EMEA, after all, does stand for “Middle East.”)
Special thanks go to Peter Taylor (Sharon’s predecessor as RVP); Christer Tonder Bell and Clive Baxter, the past two presidents of the EMEA Chapter; and Lluis Fargas and Clarence Ellis of the EMEA Chapter ’s Education Committee. The Institute also expresses its appreciation to Ernst & Young, which contributed mightily to the success of the program. A true highlight of the Dubai meeting was the welcoming address by His Excellency Khalid Ali AlBustani of the UAE Ministry of Finance, who provided an overview of business opportunities in Dubai and the Middle East.
Back Here in North America
You did not have to travel outside of North America, however, to witness the organization’s global reach. Hence, in January our Santa Clara Valley Chapter cosponsored the first Pacific Rim Tax Institute. Featuring presentations from government officials not only from the United States, but from Australia, China, India, South Korea, and the OECD, the PRTI focused on the tax administration environment in the Pacific Rim, as well as on cross-border transfer pricing disputes. Three other short “chapter news” reports illustrate the breadth of TEI’s activities. First, in December the Montreal Chapter made its annual scholarship grants, demonstrating the chapter ’s (and the larger organization’s) commitment to social responsibility. Second, members of the Nashville Chapter worked with their counterparts in the IRS’s Large Business & International Division to update their guide to “Understanding the LB&I Examination Process,” which has been posted on the IRS’s main website. And third, the San Francisco Chapter held its annual “IRS Day,” where LB&I representatives addressed a large variety of topics, including Schedule UTP, the CAP program, and the IRS’s quality assurance program. (The chapter also used the occasion to present scholarships to two students.)
Midyear Conference Highlights Tax reform and Transparency Efforts
It is too early to tell whether the United States will make significant progress toward reforming the Internal Revenue Code in 2011. There is no question, however, that the topic is receiving more attention than it has in years. From bipartisan commissions, to the President’s State of the Union Message, to Congressman Paul Ryan’s “Path to Prosperity” proposal, to the Senate’s “Gang of Six,” there have been reams of paper (or gigs of hard drive space) devoted to tax reform. Perhaps the most fleshed out proposal is S. 727, the “Bipartisan Tax Fairness and Simplification Act of 2011,” introduced by Senators Ron Wyden and Dan Coates. Accordingly, TEI invited Senator Wyden to deliver a keynote address at our 61st Midyear Conference. As a counterpoint, an invitation was also extended to Senator Orrin Hatch, the ranking Republican on the Senate Finance Committee, and TEI is pleased that both of them accepted. Their back-to-back remarks highlighted the common ground that exists among the proposals and, importantly, also the significant points of departure.
The tough road ahead was brought into sharp focus by the conference’s opening session, a panel discussion entitled “Hard Realities and No Easy Choices.” Moderated by Sandy Macfarlane of the San Francisco Chapter, the session set the tax reform stage with a thorough and entertaining discussion of the current global tax landscape. Joining Sandy on the panel were Pam Olson of Skadden Arps, former Assistant Secretary of the Treasury (and a recipient of TEI’s Distinguished Service Award), Peter Merrill of PricewaterhouseCoopers, and Marty Sullivan of Tax Notes. All four of them were excellent.
I would be remiss if I did not mention our other plenary session and keynote speakers. Given the importance of Schedule UTP, it was no surprise that the Institute devoted the Tuesday plenary session to the topic, which was styled “The Income Tax Provision in a Post-UTP Environment.” What were particularly illuminating, however, were the results of a survey that TEI sent out to conference registrants in advance. Featured speakers for this session were Nathan Andrews and Patrice Mano of Deloitte Tax; the moderators were John Mann, chair of the Institute’s Federal Tax Committee, and John Schreiber, a member of TEI’s Financial Reporting Committee.
We were honored to have IRS Commissioner Douglas Shulman address the conference again this year. The Commissioner ’s remarks touched on a number of important topics, all related to the IRS’s goal of making the examination process more efficient. Among the specific topics covered by Commissioner Shulman were the Compliance Assurance Process program, Industry Issue Resolution, and Schedule UTP. Our other keynoter was Michael Danilack, Deputy Commissioner of the IRS’s Large Business & International Division, who discussed the recent reorganization of the division, transfer pricing initiatives, and other international developments at the IRS.
All in all, the 61st Midyear Conference was excellent, and I thank all of those involved — from committee chairs and session moderators, to our speakers, to the firms that maintained exhibits or hosted receptions — for their efforts. I also thank the members who attended the conference; their active engagement helped TEI maintain its reputation as the provider of top-flight education and networking for tax executives.
Liaison Meetings and Other Advocacy Efforts
The Institute held its annual liaison meeting with the IRS, LB&I, and the Treasury Department’s Office of Tax Policy in early March. The agendas for the three meetings are reprinted in this issue, and it is no surprise that tax reform, Schedule UTP, and the recent reorganization of LB&I took center stage. Other topics discussed included the Obama Administration’s budget proposals, the codification of the economic substance doctrine, joint audits (i.e., involving not only the United States but another country), and the Foreign Account Tax Compliance Act (FATCA). With respect to Schedule UTP, we discussed a variety of topics, including the IRS’s efforts to train field personnel, the so-called Triage Group, which will analyze all the submitted forms, and the Schedule M-3 Working Group, which will work to streamline various reporting requirements.
As has been the case historically, the liaison meetings were not so much about “resolving” issues as ensuring that the lines of communication between TEI and the tax agencies remain open. As is also the tradition, the meetings were marked by mutual respect and candor. TEI very much appreciates the time and effort the government representatives devoted to preparing for the meetings. Finally, I would be remiss if I did not call attention to the submissions that are reprinted in this issue. Our amicus letter to the California Supreme Court challenged the State’s authority to retroactively impose a strict liability penalty, and our Canadian committees developed comments on reporting restricted input tax credits for GST purposes, legislation relating to non-resident trusts (NRTs), and the disclosure of “reportable” transactions.
Especially noteworthy are our outstanding comments on the Preparer Tax Identification Number (or PTIN) regulations. The PTIN rules are intended to bring greater accountability to the tax preparer marketplace, but because of the way the rules are drafted, they could well affect TEI members who assist in the preparation of returns for their employer ’s affiliates (among other things). TEI’s PTIN submission methodically analyzes the rules, and makes specific suggestions for how the IRS can narrow their scope without undermining the core purposes of the PTIN rules. I’m pleased to report that the IRS has proven receptive to TEI’s suggestions, and I am optimistic that narrowing changes will be forthcoming.
This article originally appeared in the Spring 2011 edition of The Tax Executive, the professional journal of Tax Executives Institute. Annual subscriptions are available in the TEI online store and cost $120.00 per year. A subscription to the magazine is included as one of the many benefits of membership to the association.