NewsNotes

Lesli S. Laffie, J.D., LL.M.

IRS C&L Division * TIN Matching Pilot Program * ABA and MDPs * Valuing Savings Bonds * Tax Rates on Corporate Investment (Chart)

From the IRS

C&L Division

Tax professionals, taxpayer assistance groups, business and trade associations and government groups that deal with the IRS will find an organization with new resources specifically dedicated to building partnerships. According to IR-2000-51, the IRS recently created a Communications and Liaison Division (C&L Division), designed to build and maintain effective working relationships with a broad range of private, public and governmental groups to accomplish mutual taxpayer goals. The move is part of the agency’s reorganization.

The C&L Division actively seeks to work with external groups outside the IRS to offer education, provide services and meet the public’s needs. It consists of four offices: Communications, Legislative Affairs, National Public Liaison and Governmental Liaison and Disclosure.

The National Public Liaison Office handles contacts with numerous stakeholders; in particular, it provides a conduit between the IRS and tax professionals and business and trade associations, through which information, ideas and issues flow.

The Governmental Liaison and Disclosure Office explores opportunities to partner with state tax and other authorities to streamline Federal and state tax administration and reduce taxpayer burdens. In the past, the IRS and various states have worked together on various initiatives aimed at improved tax administration, including one-stop Federal and state tax assistance sites, joint small business workshops and joint efforts to expand electronic filing of both state and Federal returns. In a first for the IRS, Governmental Liaison personnel will now be located in all 50 states to foster increased partnering with state and local government entities.

TIN Matching Pilot Program

A pilot Taxpayer Identification Number (TIN) Matching Program is scheduled for 2001, according to the IRS. The program’s goal is to reduce the number of “B notices” requiring payers to contact payees for their TINs and institute backup withholding. Due to privacy laws, payers will not be able to receive a payee’s identification number; instead, payers will be able to submit taxpayer names and TINs. The IRS’s TIN matching system will then provide, as appropriate, any of the following four responses:

1. Taxpayer name and TIN combination match.

2. Missing TIN or nonnumeric nine-digit TIN.

3. TIN not properly issued.

4. TIN and taxpayer name combination do not match.

The pilot TIN Matching Program will include Forms 1099-INT, 1099-DIV, 1099-OID, 1099-PATR, 1099-B and 1099-MISC and will be limited to 1,000 participants. A legislative change is required to allow TIN verification for Forms W-2. The TIN matching system is designed to be a secure, automated system that will be accessible through the Internet or an extranet. Requests of 25 or fewer TIN matches will be provided interactively. Bulk, “clean-up” requests of up to 100,000 TINs will be processed in 24 hours.

When fully operational, the TIN Matching Program may be used by payers, electronic return originators, tax preparers, governments and individuals holding powers of attorney whose registration has been accepted by the IRS.

To obtain more information about the project or to make suggestions, interested parties should contact the private-sector members of the Information Reporting Program Advisory Committee or the IRS Office of Payer Compliance, at (202) 622-5620.

IRS C&L Chief David Williams has oversight of the information reporting program. Members of the payer community interested in participating in the prototype project can write to: Office of Payer Compliance, Internal Revenue Service, 1111 Constitution Ave., N.W., Room 2007, Mail Stop OP:EX:ST:PC, Washington, DC 20224.

Practice & Procedures

ABA and MDPs

Recently, the American Bar Association (ABA) House of Delegates, in a vote to “preserve the core values of the profession,” overwhelmingly (75%) voted against the creation of multidisciplinary practices (MDPs).

According to Resolution 10F, lawyers should be subject only to laws that govern lawyers; thus, they should not share legal fees with nonlawyers, nor permit nonlawyers to own or control entities practicing law. The resolution urges state bar associations—as enforcers of attorney discipline—to define the practice of law and to retain and enforce laws barring law practice by “entities other than law firms.” (For a list of state and local bars that have addressed this issue, see Hymel, “Multidisciplinary Practice: The States Weigh In,” 88 Tax Notes 261 (7/10/99), p. 272-274.)

The ABA itself will study and recommend amendments to the Model Rules of Professional Conduct to “assure there are safeguards...relating to strategic alliances and other contractual relationships with nonlegal professional service providers.”

Technology

Valuing U.S. Savings Bonds

Have a client with a stack of U.S Savings Bonds, who is anxious to know what they might be worth? Those inclined to use software for such pursuits might be interested in the Savings Bond Wizard (Wizard), a program that can be downloaded free from the U.S. Treasury’s Website, at www.publicdebt. ustreas.gov, by clicking on “Savings Bond Wizard” and following the downloading instructions given. (For those not comfortable downloading software, an online Savings Bond Calculator is also available.)

Once downloaded, the Wizard allows a user to maintain inventories or lists of U.S. Savings Bonds. The Wizard prices both accrual bonds (Series I, EE, E and savings notes) and current income bonds (Series HH and H). A user need only enter issue date, denomination and series (actual serial numbers can also be used).

For an accrual bond, the Wizard displays how much interest has been earned over the bond’s life, and offers yield-to-date interest information and the bond’s next accrual and final maturity dates. For a current income bond, the Wizard shows the current interest rate, the bond’s next payment and final maturity dates, and allows a user to enter the amount of interest deferred from other bonds applied to the purchase of the current income bond.

The Wizard will price any Series I, EE, E, HH, H bond or savings note issued from 1941–present, and has value files dating back to 1992. The older historical files can be used, for example, when date-of-death values are needed to value bonds held by estates.

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