Tax Reform Discussions and Other Developments

Vol. 36 No. 3 | June 2017

By

Tax Reform

We are now heading into the last part of this 2016-2017 Tax Section year, having most recently completed the Section’s May Meeting in Washington—the third and largest meeting in our annual cycle of Section meetings. We have made good progress on many tasks, not least of which is the vital role of educating and informing our members and the public at large about tax reform.

Mark A. Prater

We were fortunate at the 2016 Joint Fall CLE Meeting to have had Barbara Angus, the Chief Tax Counsel of the House Ways and Means Committee, address the Committee’s 2016 tax reform proposals. Bill Hoagland, Senior Vice President for the Bipartisan Policy Center and a long-term government servant, continued the exploration of tax reform ideas at our 2017 Midyear Meeting, with a clear overview of the fiscal challenges facing the Trump administration and the tax debate already unfolding, including how the tax reconciliation process impacts reform and what we might expect in the discussions for “rebalancing” the federal government. Most recently, at our May Meeting last month, Mark A. Prater, Deputy Chief of Staff and Chief Tax Counsel of the United States Senate Committee on Finance, presented the Plenary Session keynote on “Prospects for Tax Reform.” He discussed the likely prospects for tax reform currently being considered by Congress. The audio-recording of his remarks are available here.

These three important presentations provided much food for thought during our discussions at these meetings and were an excellent framing for the many committee sessions dealing with tax reform topics. At the May Meeting alone, over two dozen CLE sessions featuring key government speakers from Treasury, IRS, and Capitol Hill were devoted to the many practical and policy implications of tax reform. The Tax Section should be proud not only of the expertise and technical knowledge that our committees bring to these discussions but also of the important longstanding relationships we have forged with the government. We should continue to work with those who seek to reform our tax system, to make it simpler, fairer, and more transparent.

May Meeting

While tax reform is foremost in many of our minds, as tax lawyers we are well-acquainted with the dynamic nature of our tax Code. The regular change is what attracted many of us to the tax law in the first place and what continues to make Section Meetings a must for staying up-to-date. With approximately 2,000 attendees and 150 panel presentations, the May Meeting showcased the hottest legislative and regulatory topics and also provided a complete picture of tax practice today across the range of practice areas, from basic to highly technical. Another bonus of the May Meeting was access to the most experienced tax practitioners and high level government representatives who spoke on committee panels each day.

If you don’t attend Section Meetings, I urge you to give it a try. Even if you do not choose to attend, as a benefit of membership you have exclusive access to all of the CLE materials that are offered at these meetings. The materials are searchable by committee name in a members-only database on our website called “TaxIQ” and are also more fully searchable in a Westlaw database provided by the Section’s publishing sponsor, Thomson Reuters. You can access both databases on our website here.

2017 Distinguished Service Award

Nina E. Olson

Each May Meeting the Section may present its most prestigious honor, the Distinguished Service Award. The Award was established in 1995 to underscore the Section's respect for and support of professionalism within the tax bar. It is an honor to be able to announce that the recipient of this year’s Distinguished Service Award is Nina E. Olson, National Taxpayer Advocate, for her long and outstanding career serving taxpayers, the government, and our country. I invite you to read a more detailed biography inside this issue of ABA Tax Times and also listen to the audio of her acceptance remarks here.

Government Activities

LB&I Compliance Campaigns

In February 2017, the Large Business & International (LB&I) Division of the Internal Revenue Service approached the Section of Taxation and others to assist in the coordination and rollout of LB&I’s new Compliance Campaigns. The Administrative Practice Committee responded to the request. LB&I has requested eight webinars for general public consumption: 1. Campaign Process; 2. Campaign Process Followup; 3. Deferred Variable Annuity Reserves, Micro Captive Insurance, Basket Transactions; 4. S Corp Losses, TEFRA Linkage Plan; 5. Inbound Distributor, OVDP Declines-Withdrawals; 6. Domestic Production Deduction, Form 1120 Non-Filer; 7. Repatriation, Related Party Transactions; and 8. Section 48G Energy Credit, Land Developer Completed Contract Method. Through these Campaigns, the Service plans to centralize and coordinate its considerable resources to pool its talent and produce higher quality, uniform approaches to these important issues.

This project has been a significant success largely due to the leadership of Elizabeth Askey and George Hani. During the first webinar, which was presented on March 7, 2017, Tina Meaux, LB&I Assistant Deputy Commissioner, Compliance Integration, and Kathy Robbins, LB&I Director of Enterprise Activities, discussed how the Campaigns may impact taxpayers. There were approximately 3,000 in attendance. The second webinar was held on March 28, 2017, with Ms. Meaux and Ms. Robbins again leading the discussion. More information about the schedule can be found at https://www.irs.gov/businesses/large-business-and-international-compliance-campaigns.

Estate Tax Lien Release

In our Courtesy Calls last December with the Commissioner and his senior staff, we raised an issue from the Tax Section’s Estate and Gift Taxes Committee (Ben Carter, Chair). As representative of the Committee for the Courtesy Call, T. Randolph Harris explained that the usual procedure on Estate Tax Lien Releases had changed within the last year in a way that holds up processing of estates. For example, a decedent died with a gross estate in excess of the taxable threshold, but left only approximately $1,500,000 to his heirs. The residue, including the proceeds from two coop apartments, went to charity. It was apparent that no federal estate tax would be due. In order to sell the two coops to pay expenses and settle the estate, the executors filed the regular form for the release of lien for the sale of property with clear title to the buyer. Even though the estate was not taxable, the new procedure required that the proceeds be placed in escrow. This interfered with the sale and the administration of the estate.

The Small Business/Self-Employed Division Commissioner responded that there was no intent to cause undue delay, but Mr. Harris provided several anecdotes that showed estates were being unduly prolonged. A follow-up conference call in March suggested that the Service would revise the procedures to allow estates to receive lien releases or other appropriate responses so that the estates could be settled in regular order and still without harm to the fisc. A Treasury Interim Guidance memorandum issued on April 5 reflects the results of this collaboration. This appears to be a significant accomplishment for our members and taxpayers as a whole. This work, and the Section’s work on the LB&I Compliance Campaigns mentioned above, demonstrate the meaningful input that the Section’s committees can have on government policies and procedures and the value of membership in the Section.

Government Submissions

Law improvement projects in the form of government submissions are a key component of the Section’s work and have taken on greater significance with the shrinking resources available to the Internal Revenue Service. We have been requested to provide more submissions on an urgent basis. Over this last year, we have issued 11 submissions to the government thanks to the efforts of a number of committees, and I am eager to see us keep up or even improve upon this pace. We regularly report on recent submissions in the Government Submissions Boxscore in ABA Tax Times and on the website, and we have also recently started sending separate government submission alerts by e-mail, which have been well-received by members. I encourage each of you to become involved in one or more law improvement projects with your Committee. You will find participation in these projects to be one of the most rewarding aspects of your Section membership.

Pro Bono, Public Service, and TAPS Endowment

The Section has strong and longstanding pro bono and public service programs. We have funded recent law school graduates for two-year Fellowships designed to provide representation for low-income taxpayer communities. The Section also participates in the Tax Court calendar call, Volunteer Income Tax Assistance and Adopt-a-Base programs. This is an important part of our obligation to contribute to the tax system. For this reason, the TAPS endowment was established in 2014 to ensure continued support of our Brunswick Public Service Fellows and other Section pro bono and public service initiatives.

Currently at $2.9 million, the endowment has an additional fund-raising goal of $2.5 million. Approximately $500,000 of the additional $2.5 million has been contributed or pledged, and we are working hard to raise the remaining target over the next two years. All of the Section’s officers and Council members have made commitments, but we need broader support. If you have not already done so, please consider making a donation. To learn more about the endowment and the Section’s activities in this area, visit the TAPS website at www.abatapsendowment.org.

Budget

As reported previously, the entire Association is facing critical budget issues as a result of declining membership and revenues. While the Tax Section has been a careful steward of its resources due to the past efforts of strong leadership and staff, we are not immune to the challenges imposed by membership and revenue concerns. We have had to make many difficult financial choices this year. As a result, the deficit has been cut in half. This effort will continue after my term has ended. It is our aspiration that the deficit will be further reduced in the next fiscal year. We are committed to maintaining and enhancing the value that you, our members, derive from participating in the Section, and we will keep you posted as these budget issues are resolved.

Unsung Heroes

During my term, I have used this column to recognize not only our more visible members as recipients of awards and other accolades (fine tax lawyers, like Sheri Dillon from Administrative Practice and Bob Schachat from Real Estate), but more importantly, it has also been a mission of mine to recognize the many hard-working members who actively contribute to the work of the Section but do so more often behind the scenes. They are our unsung heroes who have given generously of their time and expertise and without whose efforts the Section would not be what it is today.

Two that I commended from the podium at the May Meeting were Jasper L. (“Jack”) Cummings, Jr., with Alston & Bird LLP in Raleigh, North Carolina, and Washington, D.C., who has served for many years as the author of two books published by the Tax Section and is a past chair of the Corporate Tax Committee, and Maxine Aaronson, a solo practitioner in Dallas, Texas, who has served for many years as a member of the Administrative Practice Committee, Closely Held Businesses Committee, and Sales, Exchanges & Basis Committee. Maxine also serves as an officer of the American College of Tax Counsel and is active in the ABA Section of Dispute Resolution.

If there are others that you believe should be recognized, please let me know.

New Director

It is my pleasure to announce that the Section has a new director. John Thorner joined the staff on April 10. He brings over 20 years of high-level association management experience, most recently as the executive director and CEO of the Academy of General Dentistry, and before that as executive vice president of the American Society of Anesthesiologists. Before pursuing a career in association management, John was a journalist, practicing lawyer, and lobbyist. John received his B.A. from Duke University, M.S.J. from Columbia, and J.D. from the University of Georgia School Of Law. He is a Certified Association Executive (CAE) and has served on the Board of Directors of the American Society of Association Executives and other nonprofit entities. John may be reached at john.thorner@americanbar.org.

I also wish to thank our associate director, Ty Hansen, who served admirably as our acting director for eight months prior to John’s joining us. Ty’s keen understanding of the Section’s budget and knowledge of Section operations have been vital to our budget process this year, and I am deeply grateful to Ty and all of our professional staff for the benefit of their knowledge and hard work.

Looking Forward

Save the date for the 2017 Joint Fall CLE Meeting, which will be held September 14-16, 2017, in Austin in my home state of Texas. Austin is a highly requested destination (“Let’s go home to the Armadillo”), and I am confident that it will be a rewarding experience for all who attend. I hope to see you there.

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ABA Tax Times, June 2017
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ABA Tax Times (ISSN 2381-5868) (formerly the NewsQuarterly) reports on developments pertaining to taxation, Tax Section news and meeting updates, and other information of professional interest to Tax Section members and other readers.

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