Direct Marketing Association, The v. Huber

Filing 50

RESPONSE to 15 MOTION for Preliminary Injunction with Incorporated Memorandum of Law filed by Defendant Roxy Huber. (Attachments: # 1 Exhibit 1, # 2 Exhibit 2, # 3 Exhibit 3, # 4 Exhibit 4, # 5 Exhibit 5, # 6 Exhibit 6, # 7 Exhibit 7, Part 1, # 8 Exhibit 7, Part 2, # 9 Exhibit 7, Part 3, # 10 Exhibit 7, Part 4, # 11 Exhibit 7, Part 5, # 12 Exhibit 7, Part 6, # 13 Exhibit 7, Part 7, # 14 Exhibit 8, # 15 Exhibit 9, # 16 Exhibit 10, # 17 Exhibit 11, # 18 Exhibit 12, # 19 Exhibit 13, # 20 Exhibit 14, # 21 Exhibit 15, # 22 Exhibit 16, # 23 Exhibit 17)(Scoville, Stephanie)

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Based the TAB Strategic Plan was principles and extensive B~ on these prjnciples and,eXfen$lv~ research analysis, tfi'e TAS Strategic-Plan was; for taxpayer the designed outline d~slgned to,the vision fer: taXpayer service delivery over tI'fe next five years. Key Performance Measures the Service TAB Strategic include components comwnents,of the TABStlateglc Plan Incll!de the Perform~nce Measures Portfolio, tfle ServiCe Improvement Portfolio, to Implementation The IRS’ ability te l"1Prov~ment PortfoJlo. and the Im~lementation Strategy. The~ IRS' abilitY _ conduct research on compliance, is and improve services, consequently aM to imprQve the delivery of servl~" and GOosequently improve compllanC$ Is dependent 9n number of variables Strategic contribute the constant evolution a nQmbe.r 'of ~trat)f9;S that 'COntrib~ to tI:1e censtaltt e,voluti,o of the TAB Strategic,Plan, including tax legislation, and public marketplace. Th,erefare, inOlu(slng-uax legisJatlon" the IRS budget, technology, and the P4biic marketplace, Therefore, the implementation strategy can be institutionalized before specific elements of implem~ntation strategy. must be im!t,itutieJlalized beforespecifil>elements f)f the plan can ~ realized. '" is Based on recommendations ~e TAB Plan, consideration being given to the , Ba~ 9r:1 recpmmendations in the TAB, Strategic PI~lJt oonsid~ratiQn is bei1'}g givenct, tb$ o funding necessary enhance so that becomes choice individual taxpayers fungjng neceSsary to sp-that becofYles the first chQlce of individual ta~ayers preparers when and their pnn')ar:ers wilen they need tp sontact the IRS fur help! Consideration is also,~fng for help. also being to contact given to other program initiatives ~hat will address Inadvertent, unlntentlonal errors G uS8Q' by: program that inadvertent, unintentional caused by: _ a • Language barriers. strategies focus on providing tax information in languages LanguljJgebamers. Pursuing s~ies that fOcu$ an provldlng tax Information in;angu~es other English. .o#1er than English. , _ • barriers. Pursuing improving the Educational barriefS. Pursuih'g strategies that focus on expanding and Improving the quality e.x~nding of VITA/TCE similar partnership efforts. ~f voluntary assistance though VITA/tCE and srmJfar partn~rstftp e,ffo~. • Misunderstanding tax law. Pursuing strategies on clarifying Misunderst8ndlng of 1ax law.- P,!rsuing :stra~ies that focus ~n Clarifying and improving reduce burden that taxpayers experience in forms. instructions and publications to reduGe the burEten th'at taXpayers'experience fn attempting to comply. a~mptil19 tQ' QOmply• • • barriers. Pursuing strategies improving the focus Communication 'barriers. PurSuing st$tegi~ that foous on ImprovIng the quality, ease of use. and access to printed, telephonic assistance channels; well as usa, arid acpess fo Ilrinted. electronic, and telepMnic assistance- channels: as weU ~ placement face-to-face use -placement of fa~to-faca assistance resources to effectively ,Serve taXpayerS: unlikely to u~ t6 ecti,vely serve taxpayers other service otHet serVice channels. • Practitioners’ lack of knowledge/understanding of law. Pursuing PraGtitlonefs' I~ekof knowl~gelunderstandlng of tax law. Pursuil'lQ strategies designed to the quality accessibility tailored assistance through enhance thsqiJality and a(fCesSiJlillty of practitioner assisfa~' tbrough education, tattored' assistance channels. monitoring of practitioner behavior and return preparation assis1aPQ8 ch~nn~ls. and effective mo.nftoring,Qf praetItJonerbehaviQr ~nd f:8tum preearation quality. qual~. ' Administration’s 2008 Budget includes the funding necessary implement The Adm; IstratiQIts FY 20Q81audget request IOGludes \th~ndlng Flecessary to Jmplem~nt many telephone service recommended the ,many of the telephone ~r:vfC:f8' and website enhancements recommende;d by th~ TAB Strategic Plan. as well for individual taxpayer noncompllance and noncompliance .' Pl~{\", aewell as funding fer research to understand better Individual t,axp'ayer< effect of include: on Specific : the effeCt,df service en compliance. Speclflt; taxpayer service initiatives in the request Include: • Expand Volunlel!rlnaome Tax Assista.n~(I(ITA) prqgranis. l'h!S wiJI help expanqlSS Volunteer Income Ass/stance (VITA) programs. This will alp expand IRS volunteer return preparation. ovtread'l arn.f education,and asset-building. $8rvtces to low preparation, outreach and education, and asset-building services income, elderly, Limited Proficiency (~EP), disabled taxpayers. will increase income~ elderiy j LImited' English Protlcieney (LEP), and dtsabled taxpa~ers It Will inor~ ability recruit, assistance, and and support the _abll~ to recrult, train, and supwrt partners for outreach aod tax .asslstal')Ce, and to partners best suited identify those partn~rs beshuited to reach special populations. j tax 46 D062 Exh.7 - '- _ __._ .. CD CD r. <0 c,) CD c, 0 a zr m CD 0 0 ‘cv CD Ii 0 Contact Analytios. This will provide tools for evaluating conta~ -center exP..9riences by recording, stoling" and analyzing every element of a @Xpayer's seNice call. It wil~ provide the capa~lIrty to d~1I down to individual recorolngs. improving the" ability to measure call accuracy.·tlmeliness, and professionalism-leading to process improvements and cost savings. It also YfilllrT)prove the · a~1I1ty to id~ntjfy and respond to problems -leading to more accurate. clearer taxpayers. Employee 1 satisfactlon:wiU increase through improved,woit prooesses that allowassistors to handle more complex calls with fewt;tr tlC'ln~ers. Expanded Portfolio of T8)(I Law Decision Support Tools. This enhancement to IRS .gov will provide a common set of support too{s to maximize use by tax~yers, Pf,Jrtners. and IRS,employees. It will enal:?le userS to conduct key word ~n~ natural ,Itmg,uage queries oil ,a Frequently Asked Questions (FAQs) da~base arid to receive answers tq tax-law questions on an- interactive basis. By monitoring taxpayer use-. the IRS can oontlnuously Improve the information p~ovided to. taxpa~eTSl thereby increasing custdmer satisfaction and operational sa~ings , 0 -‘ 0 Begin' innia/ /mplementstion of TAB Strategic Plan recommendatio(1s. Based on the findings Of the TAS. the funding for this Initiative win Implement telephone sel'Vice and website electronic interaction enhancements, jncluding the following: Spanish "Where's My· Refund1 This adds the refUn(i' status 'fea~u(e to the Spanish webpage on IRS .gQv to prav,ide 1tle Spanjsh-speakfng community with the same level of customer service av~nable on Ule English webpage. o 0. - o CD CD 0 0 — CD . H 1I 0) Cfl 3 0 0> CD ;‘ o.3 CD — -* 0. Co . . mCJ)CD C (I) 0 CD — CT 0 O 0 CDCD CD 0 o.0 CD 0 C. — CD 0(0 CD (DO CD — (DZ ØCD z 0> 0 w 0 —I Esttmated Wait Tlme, This wjJI p~vjdea real-time message on the telephone service channel that infqrms taxpayers ab9ut thelr'expected wait time In queue, allowing them ' to rna more infonned pecisions based .on the status of their call. ThiS will reduce taxpayer byrden and increase customer sstlstact.ion. <:) o rn a - 0 -‘ CD 0 :i- CD (03 CO 0 CD u ii;. 0. CD - CD X CD CD 0 x CO z CD V 0 C C) Understanding wpayer needs thl'QUgh the errors ,they make; and CD o CD Developing a better understanping of taxpayer burden; CD o 0 0 Meeting taxpayer needs through the most effective and efficient service channels; I CD Co CD g Examining th$. effect of ser:vice on overall levels of voluntary compliance. 0 0 () 0 — . Conduct re$earch on the effect ofservice on taxpayer complfsf'!C6. This will prqvide additional resources fora long-term, conce~ research effortto identify ways ,to Glose It!e tax gap and to base the allocation of r:esources to both service an~ enforcement activities on a clearer understanding of how these-activities affect voluntary compliance. This will r8Q!J1re compiling more compreheoslve data over a number of ye~rsJ culm il"j~tjng In yearly analyses d~si.9ned to quantify the effect of most IRS aclivitJes on the voluntary complianee of specifjc taxpayer pbpulations. The research w.ill foous 0"' feur are~s: 0 • Ni ·...•..•. - - - - -- -. ...... ........ 47 D063 Exh.7 fr I .-. z. There is perhaps no area with greater potential for reducing burden for both taxpayep; and ~e IRS than Electronic Tax AdminiStra60n (ETA). The. benefits of electronic irrteraction,witJrl ~yers aFa clear and comRGlllng. ManY'taxpay,ers find it mare epnven1entand beneficial to'do business electronicafly (han to send paper through'the mail. In ~dditj~n. taxpayers can get their questions answersd and can download the form t~y need at their oonverfence. at any time of the day or night. For the IRS, handling taxpayer contacts ele,etrohlcall~ mean~S' that employees can be refoc~ to other high-benefit purposes. ' Significant challenges remain in ttansitiomng tram a paper-based environment to an'eieotrenic-based environment. The IRS has developed an E..str8tegy far GFowth. which outlines the IRS' ' plans to reduce taxpayer burden. Ta achieve the strategic goars~ the,IRS will develop and implement ~file m.arketing strategl~. continue to expa'rld tne use'of electronic-slgnabires, -and enhan~ IRS website services for lx>th ptaetlUOners and taxpayers. Ultimately. the goa1 of the fRS IS to offal' all taxpayers antftheir reJ)resentatives the~abllity to cpnquCt nearly all of their inte~Ptions with the IRS electronically. • Mare accurate retums; • • -no • m • CD 0 . F. Faster refunds; U) • ‘i CD A key campanent of ETA for theiRS is e-flling. fhis 8ys1em flas demonst~ed' m~urable success with regard to 1r1dlvldual taxpayer satl$faction. from itS modest beglnnlngas a pilot program in 1986 - when 25,000 returnS 'were flled' electronically - ttle number of e-flled Tetums has dramatically ihCl'eased, with more than 71 mllUon return~ flied eJectronlcallyln the last filln9 seasan. The benefits to these taxpayers Include: — U) Z ( Quick electronic confirm-ationl CD Free Intemet flling; z 0 -3 ‘< Easy payment optiQns; and CD Ci, CD Federer/State e-filing, . An additional s~rvjce tfiat allows tax professionals and payers to do busln~ with the IRS electronically Is e-Servi~t a suite of lntemet based products. These services lrpude,Preparer TaxRayer Jdentlficatlon Number (PTIN) applipaflons with Instant ~ellvery, T~payer IdentificatJem Num~r (TIN) matohil"!9 foJUlIrd-party payers, on-line reg1sUatiopior electronic e-Servrces. and on-line initiation of the e'~onlc return originator application. The e-Services' .IncentiVes , PfC)ducts offered to InCl'ease e-fllir'lg are on-lin~ Disclosure Authoriza~n, Electronic A~t Re50lutloA and TranSCript DeIiV~ry System. Que 19 industrY demand. the availjlbi of incentiVes to those tax professionals and payers that ~file has been lowered from 100 to 5 indiVidual returns. filed. 48 D064 Exh.7 0—0> ' • •• • • _ P ~ _ '~ ._ ~ . . _ _ _- . . . . . . . . — z0(0 the • • Improve services through programscat both the national and local level by expanding collabprations with organizations serving the disabled, Native American communitie_ and s, pre-existing rutal infrastructures. • Expand and enhance the Spanish website to increase electronic options, Including options for Spanish language delivery of applications currently only available in English. (AlliO supports Component 3) • Provide Reporting Agents with access to e-Services. (Also s~pports Component 3) 0 — V CD 9) z 0 0 - C) <Do 0 C X 3 <D (l)o.• 00) OZ 0 CD :-u : 0 00 ‘..o (0 3 C, g CD 0 U [ 3 h 0 0 0:,< -, 3 °- c m <D - Ci) E h -4 0 c, o 3V Ø 0 V G C) rn .0 Ø fl)Z 0 0> 0)0 > Z 0 CD <D o CD o — 0 CDZ- o 0 (I) V g <DO 3 1g. - O(Ct ‘CD0 (i)Q.( CD < <D<D U)> 00 <D0 0 —4 ° <Dx . ‘ 00 — orr c U) o(t) 2 -‘ 0 (0 0 - - 00 v<D — Qc CD 03 fl oS2 H ‘<C -ij H j: J 2. 2 .% tQ) V0 ‘<D9U) !1 11 H 0 . i v3 CD Z -‘ <DV 0)4< o- a Z’ 0 00 ; z> o — - OX 0 0 2: o <DO C)— oc > cm V o <D — ;a1 < ‘ .-tj) taxpa~ers 3 Implement Imemet-Customer Account Services (I-C~S) Release 1, Which will enable to view account information. (Also supports Compoc nent 3) 00 • Implement Taxpayer Assistance BlueprintPhase 2. whiCh Includes a flve;-year strategic plan for laxpayer servIce based on extensive research to understand taxpayer and stakeholder needs. ‘<3 • • • I. C<DO Ø<D i 9o • <fl%V • -Enhance • — • Improve quality and timelin9;SS of taxpayer contacts by maintaining an enhanced Integrated quality assurance process with ~ntemal and external partners. (Also supports Component 4) • v— 000) z z • Enhance servises to persons With limited English proficiency through; the TaXpayer As~istance Blueprint; development of a MUlti-lingual StrategiC Plan; development o1'a Virtual Translation Office; and launch of a revised version of the Spanish webpage. • < cO C) V(D c V V 000— — U) . Improve the quality of volunteer-prepared returns through enhancements to the VITA program, includlhg quality tralning and sample processing reviews. • I fl • Increase accuracy on toll-free telephone customer inqUiries, processingfunctipns ~nd p~per adjustments. • D 0 C • Enable taxpayers with disabilities to understand available tax credits and receive tax preparation assistance through partnerships with national and local organizations that sarVe this unique group of taxpayers. (Also supports Component 7) • t1. . . Cn Initiatives 0• (0> 0) g€ CDX <° -‘ 0 CD ..— C CDQC) U) t Cl) 0”CD Another electroplc servlet) success laun~hed recently is the new Onlfne Payment Agreement available on Over 90 percent of ta)(payers entering Into payment agreementS with IRS can now requeSt an agreement and receive confirmation of its approval through this' application. 00) <D r (1) Z (0 0 0 ‘. 3 U)’ ‘< ; <C = V 0 C CD 0 C 49 Co z 0) Continue publicity efforts encouragin~ use of Online Payment Ag~menL 3)<D • V Implement I-CAS Release 2.. which will enable taxpayers to change their, file an extenSion, submit a Power of Attorney, and ca!culate a payoff amount on balances due vIa a secure Internet link. (Also supports Component 3) (D CD3 • D065 Exh.7 Component 6 Reform and Simphfy the Tax Law and Simplify The oj ~x code makes it difficult for to their tax obligations The complexity of the tax code makes ii difficuft for taxpayers to understand their tax obQgations the administer tax Special rules. subtle distinctJon~Jn the law and and arid for the IRS to administer the tax law. Special rules subtle distintions in the tax law and add and our tax complicated computations add to this complexity arid foster a sense of unfairness in ourtax tlYstem, which compJrance. Notwithstandipg an inereasing system, Which ultimately discourages compliance. Nptwithstanding sri increasing awareness of tctxes paid q.x oontinues move in a Of the discrepancy in taxes due and taxes paid, the tax law continues to nave in S direction of 4 Congress complexity. efforts A:lduce ta:X'1jap. In alone, increasing complexity which frustrates efforts to reduce the tax gap. In 2006 alone Congress ,egislation that4fected l law. bills, prGvisions passed passed six items of legislation that affected the tax law, Within these bIlks, 223 provIsions required over 1,200 actions by the IRS to implement the new requlrements These chaigsto over actions the Implement reql(irements. changes to furthet compl.exity tf)erefore. IRS' Increase the tax law further increased complexity and, therefore, lessened the IRS’ ability to iricre$e the may requl~ Shift. \toluntary compliance. voluntary compllance. Simplification rnayequire a paradigm shiL law to comply the make.unlntentJonal 00 their Taxpayers who want tà comply with ‘the tax Jaw often make uintentionel errors on their returns to l(nderstand complicated rules forms. provides as they asitbey struggle t understand eomplieated tules and forms Complexity also provides systeM. Furthermore It opportunities are willing to opportunit{es for those who re witting (d exploit the system Furthermore. complexity makes it .difficult *r the IRS tø detect noncompliance. Simplifying the ta code wiRrøducenintentlOtil to tax Will reduce unintenOOnal difflutt for errors- welImeaning and reduce eW$ion. errors by well-meanIng taxpayers apd reduce opportunities for evasion. A simpler tax code will also easier administer. alø be easter for the IRS to administer ; The Administration’s FY 2008 Budget provides-several proposals that would assist with Adrrilnlstratkm's provides several pro~1s thatwould-ass stwlth simplification, reduC6'.errors, and (axpa, ers' linderstanding otavailabJe y slmpliflcation reduce errors, arid improve taxpayers’ understanding of available tax benefits. These proposals would: • d~I1Jtion Clarify the uniform definitjon of a child; • Simplify Earned tncome Tax Credit'(EITC) eligibility reqyrements regarding111lng’ status, requirements regareing fiUng Income Credit (EITO) presence of chi1dren and work and immigrant status; and ctlildren, ahd woi3c and • • ReduC$ computational complexJty of the refundable child tax credit. complexity ofthe Reduce inorøasiny cammjfted limited m ~uroesThe complexity of the tax law necessitates that li, ited IRS resoWces are increasingly committe<! neoessittes social goaIs. createcLto to administering a wide array of targeted tax provisions c~ted to meet -Social policy 9oals. administering:-a ‘to mpliance efforts. lR$has These targeted provisions divert IRS re&9urces- trom basic compliance efforts~ The IRS has provlsk>ns resources from establlspment of the of , taken a number of steps to reduce tax~yer burden, including the establishmentofthe Office ef taxpayer burden. takøn : Taxpayer Burden Reductio" (TBR). Recent improvements in IRS forms, processes and processes taxpayer Reduction (TBR) prooedures include;, procedures Include: J • • SirnplifYin.g the filing requIrements for Form M4 (Employer's Annual ?eder$tax Returr); 944 (Employers Anriiial Federal TltX'RetUm); Simplifying’ the3Iflnrequirements for • • filing FQrm 2$S (ApplicØrn fr Additional xtenslon Eliminating th.;r need for tiling f’.orm 2688 (Application for Additk;)nal Extensjon of Time to File ElimInating the n~ 1:.1.5. Individual Income Tax Return) by allowing taXpay-ers to-get an automatic six month ~tum) by ailowing taxpayers to jet an U,S. Iridividual extension to-file; and file; to 50 50 D066 Exh.7 •• Creating the EITC Assistant, an on-line tool that helps taxpayers determine their eligibility for Creating the EITC AssJstant. ~n on-line tool that helps taxpayers determine their eligibility fQr the earned inoome tax credit (EITC) and their estimated EITC amount the earned income tax credit (EITC) and their estimated EITC amount. Additional projects to simplify tax forms and processes are currently under review by TBR. , Additional projeqts to slmpflfytax forms and processes are ,cuf1Jntly under I'&view by TBR. Another IRS resource commitment aimed at addressing the issue of helping taxpayers . Another IRS resource com{T1itment aimed at addressing the Issue of Melping taxpayers understand complex tax rules involves form and publication improvement efforts. The IRS . understand .complex tax rules involves furm and publication Improvemeht effort&. The IRS originates and improves forms, instructions and publications to ensure they are technically , originates and lmproyes tax form'S, instructions and publications to ensure they are technically accurate, timely, understandable, and as easy use as possible in order for accurate, timely. unders~ndable, and as easy to use as possible in order for taxpayers to fUlfill fulfill their tax filing and payment There are currently over 1.000 tax products, including , their fax 'filing anQ payment obligations. The,;e are currently over 1 ,boo tax. products,inCluding forms, instructions, publications, and Spanish products. Each forrps, instructions, publications, a, d S~nish tax products. Each year the IRS revleWs its IRS reviews its products goal simplifying, burden, increasing understanding. eliminating p~ucts with the goal of slmplifyfng, reducing burden. Increasing understanding. elimlnati~g redundancy, taxpayer feedback, research, and tax law redund~mcy" and fostering compliance. Based on laxpayerfeedback. research,· a~d ~Iaw changes, e)(jsting producfs are revised and neY' prOducts developei! regularly. Recentexamples new products developed changes existing products are Recent examples include Schedule M-3, 944. Tax Return, Include the SchedUle M-3. Form 944 Employers Annual Federal tax .Return, and the new draft the Form 990. Organization Exempt Tax. is now available for F.onn 990 Return for Or.ganizaoon"Exempt from Income Tax, which [s' now a~aiJable fOr public comment. There are also oomplrance proposals un,der review for Fon:ns1120, U.S. Corporation compliance proposals under Forms 1120. here Income Tax Retum, and Form 1065, U.S. Return of Partners"ip tncorne. To address poteJ:1tial Return, Partnership Income. potential issues individuals compliance Issues for small businesses and Individll131s with limited English proficiency. chapters proficiency, in Tax, Publication 334. Tax in Publication 17, Your Federal Income Tax. and -PubJicatiol1 334, Ta" Guide for'Businesses, are' for Businesses, are into Spanish. being translated info Spanish. l is product forms~ is used to disseminate tax proauct information and changes. It contain:; draft forms. contains final forms, What’s Hot Forms. Publications, Other final forms.. and a What's Hot in Tax Fo,Jllls, Publicalions, and .other Tax Products. Whicl1 which includes articles addition, there Includes articles- on ,tax product changes. , In addijion, there is an email addresstax emart address taxformsfrs.qov -for submitting romments en IRS tax products. taxforms@irs,QOv for submitting comments on IRS j Focus grDups.a:re ~P$yefinfQrroation relatiVe product Focus groups are conducted regularly to obtain taxpayer information relative to product changes. Public interaction is also a focal point of the IRS Nationwjde Tax Forums, an annual cbanges. P.ublie interacti0n is also a focar PQlnt 0f 8> IRS' Nationwide Forums. venue that provides another opportunity for feedback regarding tax forms and publications, and venue provides anott)er opportunity fpr feedback regarding tax and publications, and other interactions with stakeholder groups. other Interactions with groups. — to init1aves • • Work with Congress to enact simplification legislative proposals in Administration’s FY 2008 Work. with Congress to enact simplification legislative proposals ~n Administration's FY 2008 Budget to: Budget to: o Clarify the uniform definition of a child; o Clarify the uniform definition of a child; o Simplify EITC eligibility requirements regarding filing status, presence of children, and o Simplify EITC elig1bility requirements regarding filing stat~s. presence of chlldr:en, and work and immigrant status; and wo~ and Immigrantstatu$; and . o Reduce computational complexity of the refundable child tax credit. o Reduce computational complexity of the refundable child tax credit. 51 51 D067 Exh.7 " • --. ---_. - Continue Tax~yer Burden Reducliol"! projects involving: Continue Taxpayer Burden Reduction projects involving: o o Simplifying the S-corporation election process; Simplifying the S-corporation election process; Simplifying emploYment tax return amendments (Forms 941, 943, 944, 945); and o Simplifying employment tax return amendments (Forms 941, 943, 944, and 945); and 0 Redesigning Form 8857, Innocent Relief. o Redesigning Form 8857, Request for Innocent Spouse Relief. I • Form and Publication Improvements. Continue Tax Form and Publication improvements. 52 52 D068 Exh.7 L Component 7 Partners Coordinate with Partners and Stakeholders Conducting outreach and leveraging external partnerships is a key component. I The IRS is partnering leveraging resources with local, state. and federal agencies The IRS is partnering and leveraging resources with loosl, state, an~ federal ~encies across the the country. Examples accomplishments resulting from relationships include the following: , country. Examples of accomplishments resolting from these relationsh~ps include the following: • Centralizing the process for IRS reports: Centralizing tt)e Pf.0C;8SS for U~S assessments based on state audit reports; • • Implementing Employment Tax Practices Initiative ImplementiAg a Questionable Emp.loymenfTax PracticeS (QETP) Initia1ive to develop a a federal interagency approach employment tax federal and state interagenqy approach to combat ~mployment tax schemes and inqtease increase voluntary compliance. date, 16 states have vGluntary compnance. To date, 16 statesM.'Ve agreed to partner with the IRS on this the initiative: InitiativeJ • Obtaining agreements stakeholders • 'Obtaining 88 agreemen1s in 27 states with stakeholders such as state professio\1allicensJI')g professional licensing agencies and local business licensing agencies to distribute educational infonnation to small business licensing information business applicants; busihess applicants; • • Establishing Establishing the Leeds Castle Group with the tax administration agencies of China, India, the administ't"ation ag~ncies of China, India South Korea, the United Kingdom, Japan. Australia. Canada, France. and Germany to meet South Korea, the United Kingdom. Japan. AustraJia, Canada, France, GermaAY regularly to consider and discuss issues related to global and national wcadmlnlStration; regularlY to and dtscuSs Issues related to global and national tax administration; • Developing a Joint Operations Center (JOC) for National fuel Tax Compliance in partnership Developing a Joint Operatl<?ns Center (JOC) for National Fuel Tax Compliance In PCilrtnership with the Federal Highway Administration (FHWA) 'and participating states to act as one with the Federal Highway Administration (FI:IWA) and Pilrticjpating states to act as one seamless organization leveraging resources at the state and federal level to develop fuel tax seamless organization lever:aging resources at the state and federal level ta develop fuel tax compliance strategies. including joint examinations and investigations based on JOC data compliance-strategies, including joint examinations and irwestig~tions based QnJOC data analysis; analysis; • • Utilizing state/federal data for Combined Annual Wage Reporting (CAWR)/Federal utilizing stat~federal data for Cpmbined Annual Wage Reporting {CAWR)/Federal Unemployment Tax (FUTA) matches; and Unemployment Tax (FUTA) matches; and •• Partnering with foreign tax agencies as part of the Organization for Economic Cooperation P-artnering with forelan tax agencies as part of the Organl~ijon for Economic Cooperation and Development’s (OECD) Forum on Tax Administration. and Oevelopmaht's (OECD) Forum on Tax Administration. The IRS. in connection with the OECD Working Party on Aggressive Tax Planning, is currently The IRS, in connection with the GECD Working Party on Aggressive Ta~ Plan~logl i. clArTf.!nUv s designing a database of various cross-border tax avoidance schemes in order to share designing a da~base of various gross-border tEpc avoidance sch~mes in order jo s~~ knowledge and information among the OECD members. In addition, several Tax Information knowledge and lriformation amo~g the OECD member:s. In addition, ~everal, Information Exchange Agreements (TIEAs) recently became effective that will be useful in gathering valuable Exchange Agreements (TIEAs) recently became effective that will be usefu.lln g8~rfng valuable information (i.e., financial institution information) in the effort to reduce the tax gap. Information (I.e .• financial institUtJon information) In the effort to reduce the-tax gap. The United States, Canada, Australia, and the United Kingdom continue their collaboration at the The United States~ Canada, Allstra"~, and the UnitefJJ<Jngdoro continue their collaboration at the i Joint International Tax Shelter Information Center (JITSIC) to supplement the ongoing work of Joint Ihtemabonal Tax St)elter Information Center (JrtS/C) to supplement fhe-ongoing work of .l each of the tax administrations in identifying and curbing abusive tax avoidance transactions, , cb of the fax Iiidminlstra~()Os in fdentlfylng ana QArblng abusive 1aJt avoidance transactions. arrangements, and schemes. . The objectives of JITSIC are to deter promotion and investment in arrangements, and schern~s The objectives of JlTSrc are to deter promotion and investment In abusive tax schemes. primarily through exchange of information. Exchange of information in abusive;tax schemes, prtmanly through exchange of Infonnatipn. Exohange of il'\formation In JITSIC is done in accordance with the provisions of the bilateral treaties between each of the four JITSIC is don~ in sCCGrdsnce.Wlth the provIsions of tlie bilateral treaties between each of the four countries involved. GOuntries involved. 53 53 D069 Exh.7 C 0. CD —. CD CD 3 Initiatives under development include the follawfng: CD z 0 a. — 0 X 0) !“9. ih CD IU H CD 0 z CD” g-n ::,CD !“‘ o3 . P 3 c . ' Data 'Warehouse/Minlng: Conducting a test to evaluate the tax administration benefits of utiliZing the state data wan:,house concspt. Tax EdUcation: Entering into agreements with state edua]ltjon departments and feder:al immigration agencies-to promote ·UnderStandlng Taxes" materials to educate 10(Jnger citizens and foreign taxpayers 99in9 through naturallza~ion about U.S. tax responsibilities. • Small Business Assistan,ce: Expansion of partnerships wtth the Sm~1I Business Its- Service Corps of Retired Exacutives (SeORE) program and Small Business Development Centers (SBDCs), aawall as other partners'to ~eliver expanded tducatiol;l'tll messages directly to bUSiness ow~l's. 0. -3 C a.e 0 m° CD CD 0( c N)CCD 0. CD 0) 0) C-’. c3z3 CD 3-CD 0)03 CD 0 -, 3-...CD o. < 3- (n;a::, d) CD - E (0 CD z ‘t1j 4fl I, . h r 5. ,J o øCD llfl 3€ C 0) Z 0) OØ0) z—3— {3 z’(D Admlni~tion (SBA) and (D CI) • —‘‘. File Matoh Initiative (SRFMI): Deveroping a system where states match ~RS master file extracts agalnst sWe master files to Identify !hose who filed sta~ but not federal returns, and those whe reported different amollnts on their state and federal retl1m$. Qww Stat~ R~verse HH • ‘!. cn— 0. 0.. 0)Z ! 1 0. 0 C,’ -‘ 0. C 3 a C — -‘ c 0 — fl a. If: a (0 0) g D0 — c .. 3 C 0) C’) 0 Ø) • c cr-i c3 0 ° 0 -4 '0 0 Ttle T{lx Calendar for Small Businesses and SeJf-Empleyed; and "Ta~ Talk TOday,· a monthly web casHor tax professionalsf~tUring IRS ~matfves discl!ISSing s.igniflcant tax Issues. G -‘.0Y 3 ‘1 CD g.. CD C” 0 0. CD CI . — 3 CD o’Z I <0) )0) 00 0 g (0 H fl - 3 . - 0) Developing and widely dlstributlng educational inforplaUon on Breas of high nenoomptlance, such as. computation ofbusil'1ess iAcome, cost of goods SQld, ahd various buSiness expenses. € ! . The,Small Business- Resource Guide CO~om; h . 0 — . CD 0 CD —. z (4 o z 9 Ci I 0 ° CD - CD CD -4 o a 0 The Virtual SmaJlBusiness Tax WQrkshop E>VD, 'a 10-lessoo interactivev~deo: 3 Oirn o 0 o 0 Electronic n~wsletters1hcludlng e-news for Tax Pr:ofe.ssionals" and -e-neWs for Small Businesses·; =. <, 6 , Gffer.lng multiple educational products, such as; Q • —. Implementing Small Business Ferums with Industry representatives and smail business owners. (I) • o Delivering informatien through Phone Forums to practitioners, Industry represenfatives t and small bUsiness owners. 0 . c — ;ng 1)3 = O ,%‘< o • 03 . Development of rel~tionships with over 1,500 small business industJly and tax professional organizations to deliver expedltfously key tax-related messagea to small bUsiness aUc:flences. — F1° • . i W) 0 a) :±w The IRS also has a robust oL;rtreach and,education program ~ccoriipl18hed throug,h ~Iationships with national and I~I payroll, practitioner, small business, and indus!rY stakehokfer , o~anizatIQns. Examples of accompUshments Include: I 54 D070 Exh.7 I I R Delivering an outreach campaign to i,ndustries that includ~s Auctit Technique Guides and Tax ' Tips, whjch provide specific Information for -small businesses; and • Providing Ethics Seminars for P[actitioners addressing requirements from the Cireuiar 230. p E — 0 I C - 0 o fl!fl 00 rn z 0 • n • Establishing a system to track resolution of prol>lem Issues Identlflad by stakeholders (Issue Management Resolution System); • • 0 Provide outreach and educStlon to unaffiliated tax professionals - those who provide ta~ preparation services but do n0t align themseJVes wlffi a professional organlzationj and • Increase outreach and 9$iucatton regarding ~omme~ ,issues, IrtCludjng taxability of sales 'transactions on auction sites. I 00 I, Q 0 g 1 U 00 H H 90 iii x • — • z 0 Initiatives include development of strategies to: In addition the IRS works with partners to disseminate tax infarmation on subjects such as the BTC, child tax credit. e-tile,. Jife..cycJe events, and compliance Issues anq to provide f~ income tax. preparation to specifiC taxpayer populations (i.~., /ow income, elde~YJ limited ~nglish proficiency. dlsablea). Relationships e)(ist With 60 national partners such a AARP, Armed Forces Tax Council, United Way, Health & Human Services, AnnlllE. C~sey, ~nd the KellQgg Foundation. In additiafl, 'the IRS supPorts more than 300 coalitions natiOriWide. COl11prised of thousan(1s of community partners who educate or serve millions of taxpayers. This effort facilitated the opening of over 12,000 VITA and Ta){'Counselingfur the Elderly sites with more than 68,000 volunteers' ~urin9 the 2Q06 flUng season. I Engage all 50 states through the State Reverse File Match Initiative (SRFMI) - a process that matches IRS extracts received through the Govemmentalliaison Data Exchange program against state maSter 'files to identify Individuals and businesses who filed a state return but not a federal retum and to Identify differenceS in federal and state income reporting. (Also 3 U 3 z 0 0 (DO 0 0 B-fl H (jZ (0 z U J,C p • C ø-. Further entlance the FedlFed program by facilitating aod expanding partnerships with other federaJ agencies to improve tax administration. (Also supports CQmponent 4) 0 = • < z . Implement a Questionable Employment Tax Practices (ORP) initiative In partnership with 1he Department of'Labor, the National Associ~tion of State Workforce Agencies, the Federation of Tax Administrators, and state workforce agencies, to provlqe a collaJ:>orative n~tional approach lQ co01bat employment tax 'schemes. (Also sUPPQrts Companent 4) (00 • > I Further enhance the centralized process to maximize the 'utiUzation of State Audit RepOrts (SARs) by IRS far federal assessments. (Also.supports Component 4) I • • a nitiatives " "'" .. , -.. - - N .~ -- -, -_., ..... "._ .. ..... --,. 55 01 (7’ ------- C 0 03 00 0 Determine -tax administration benefits of utiUzing state date warehouse eQncepl (Also suPPOrts Components 3 and 4) ts • I I supports Componeflf 4) D071 Exh.7 i. • ! • a ed~~~~~:;' targeted perso~n~~-rp eparing Develop military Develop an educational targeted outreach DVD for military personnel preparing for ~) (Also retirement. (Also supports Component 5) Enhance industry audiences about Guides and Enhance outreach efforts to industry audiences about available Audit Technique Guides and Tax Tips. Tax • Develop and widely distribute educational fact sheets on areas of high noncompliance. Oevelop distribute • Develop a strategy to reach practitioners without affiliation to a professional organization organization. • ..i Industry. practitioner, educational. Establish links to lRSgov on industry practitioner. educational and governmental stakeholders" stakeholders’ websites. a • .. j. Leverage key partners such as the SBA and Its SCORE program and SBDCs to deliver small its SBOCs business workshops to the new business community. l. a Deliver educational messages through existing relationships with universities and colleges. college~. • wait Develop audio educational messages for toll-free wait times. • I. Customize outreach to specific industries to encourage voluntary compliance. !• . Request feedback from internal and external stakeholders on existing outreach and int~rnal educational programs to identify best practices and enhancements. I. • I • f, • filers. Develop strategies to educate first-time business filers, , . With foreign admlnlstratfons Expand relationships and collaboration with 'foreign tax administrations to increase the informal and formal communications on international tax administration matters. administratien Return to Table of Contents 56 D072 Exh.7 SUMMARY To implement the steps outlined in this report successfully, it is imperative for the IRS to have a highly trained and engaged workforce. While not addressed in detail in this report, the IRS is committed to employee engagement, ongoing training assessments and delivery, ongoing agency-wide communications, employee and managerial burden reduction, leadership empowerment, and succession planning. The IRS has extensive action plans and strategies in each of these areas. For example, in the area of succession planning, the IRS has established a Leadership Succession Planning office and is implementing a Leadership Succession Review (LSR) process in FY 2007. The LSR process involves leadership assessments of all senior managers, executive review of the assessments, and one-on-one feedback and discussion of executive potential. The actions outlined in this report address improving compliance through a balanced approach. This report describes steps currently being taken, and those under development, by the IRS to reduce opportunities for tax evasion, details how the IRS will leverage technology, recognizes the critical need for a strong taxpayer service program, discusses development of taxpayer service initiatives, and describes legislative proposals that, when implemented, will improve compliance. At the same time, the initiatives maintain respect for taxpayer rights, limit burden on compliant taxpayers, and present an outreach approach to ensure all taxpayers understand their tax obligations. This report also details the importance of having a multi-year research program that will assist both in understanding the scope and reasons for noncompliance. It is important to take all reasonable steps to improve voluntary compliance. As more is learned about the causes of noncompliance and ways to improve voluntary compliance, strategies will be modified to reflect the latest information. It is clear that consistent efforts to keep the complexity and unnecessary burden of the tax system to a minimum, to provide the level of service that the taxpaying public deserves, and to maintain a strong and well-targeted enforcement presence are necessary to improve compliance rates. The IRS is committed to applying its resources where they are of most value in reducing noncompliance while ensuring fairness, observing taxpayer rights, and reducing the burden on taxpayers who comply. Return to Table of Contents 57 D073 Exh.7 APPENDIX APPENDI Timeframes for Initiative Implementation Initiative Implementation Related Tr:easury Initiatives I a FY2009 Milestones Strategy COmponent(s)t (Bold = Prin,ary) Work with Congress to enact remaining legislative proposals included in the Administration’s FY Administration's 2008 Budget. 1,6 Ongoing IRS will continue to identify legislative proposals in partnership with Treasury 2/09 IRS will continue to identify legislative proposals in partnership with Treasury q ~ t 1. Reduce Opportunities for Evasion; 2. Make a Multi-Year Commitment to Research; 3. Continue Improvements in Information Technology; 4. 1. Reduce Opportunities for Evasion; 2. Make a Multi-Year Commitment to Research; 3. Continue Improvements in Information Technology; 4. Improve Compliance Activities; 5, Enhance Taxpayer Service; 6. Reform and Simplify the Tax Law; and 7. Coordinate with Partners and Improve Compliance Activities; 5. Enhance Taxpayer Service; 6. Reform and Simplify the Tax Law; and 7. Coordinate with Partners and Stakeholders. Stakeholders. t Check indicates initiative will continue beyond FY09 depending on budget availability. Check indicates initiative will continue beyond FY09 depending on budget availability. D074 58 58 Exh.7 Relate4 Treasury Related Treasury I nlua yes Initiatives Strategy Strategy FY 2008 FY2008 FY2009 FY 2009 Component(s) Componant(s) t Milestones Milestones Milestones (Bo’d Ptknary) (Bold :; Primary.) 6/30/08 7/30/08 Identify approximately 250 items for which guidance is a priority 7/30/09 Identify approximately 250 items for which guidance is a priority 8/30/08 Release the 2008-2009 Priority Guidance Plan (PGP) 8/30/09 Release the 2009-2010 PGP 9/30/09 Release at least 80% of the items appearing on the 20072008 PGP I Request recommendations from stakeholders for topics on which guidance should be a priority 9/30/08 Develop regulations and other published guidance clarifying ambiguous areas of the law, targeting specific areas of noncompliance and preventing abusive behavior. 6/30/09 Request recommendations from stakeholders for topics on which guidance should be a priority Beyond FY 2009 Release at least 85% of the items appearing on the 20082009 PGP D075 59 59 Exh.7 1 \' " ,'Ii .,.y:; ~~"';f- ,~, r: ~l~ [. Initiatives ':.~ 0- 1 •.;11 '·I·~.~"III R~aied Treasury Related Treasuty ~~' Strategy Component(s)J Cp)t -.r '...,.~ .'l ~ (BOld Primary) çd = Primary) " ' I - -..:,~, '~-....", . I • ~ 'I . 'i,"' -.-"'j.:~ : r,.~· J~ Pt’ '.FY 2008 MII~nes Milestones - :;': ....... :~:./:~ '/ _ ::__ ' ,,~" .~I • '-'~ ~'l ~ (·:r; 1 0/1/07 10/1/07 Undertake additional compliance studies, including S corporations and individuals. Update tax gap estimates using new and existing data. Research the effect of service on taxpayer compliance. .. \ ti..l~ • ~ Begin reporting compliance study for TY 2006 individual income tax returns ',. FY 2009 Milestones Beyond FY 20O9 FY2009* Io['f:-/ 10/1/08 Begin reporting compliance study for TY 2007 individual income tax returns 2 q ~ 6/30/08 Corn plete Complete S corporation compliance study 6/30/08 Release S corporation reporting compliance study tabulations 2 2 6/30/09 Update payment and filing compliance estimates 6/30/08 Update payment compliance estimates 9/30/08 Undertake at least three significant research projects linking service to compliance (e.g., study relationship between taxpayer attitudes and compliance) ‘I ~ 9/30/09 Undertake at least three significant research projects linking service to compliance (e.g., study how particular types of service delivery affect individual compliance) D076 60 Exh.7 ~ '.~i!.~:~ ~~~_:~..rt!:~~ l~:;' Treasury Related TreasurY !iJ,I , , , Strategy Stmtegy :,),~ InWatives : lnlti8ttvCornponent(s)t '" Component(s)t :Jo~ I~ Ii ('.. ' ' 'T1 _ _. _.~~ ~ :~';4i~ ~ I ): Research the relationship between complexity, burden, and compliance. Improve high income and non-EITC exam workload selection and method of delivery and assess the effectiveness of the exam treatment stream on selected nonfifer nonfiler cases. (Bold = Primary) (BGld .lL FY2008 FY 2G08 ,MllestonEts MUestories " ~ " 0," ,. , ~ .. < ~ " " -, .. ... ,/1 I '; II, "r , ft; ,-,.,-j", , ~ " -. ~.I~ ,ft. ". . -, , • -, " 'FY2009 FY 2009 Milestones I c , ' ~ '1 ,Beyond BeYond FY 200 FY2009* " I " ,.r.' =', .,.A, . . . . . : , ~ ...... - . 9/30/09 Undertake survey of individual taxpayers to improve burden estimates (e.g., conduct a new survey of individual taxpayer burden) 2 3,4 3 4 9/30/09 Begin at least three research projects focusing on the relationships between complexity, burden, and compliance 10/1/07 Begin selecting, classifying, and auditing individual returns based on updated selection scores derived from NRP TY 2001 results 10/1/08 Begin evaluating the productivity of high-income taxpayer cases identified using the revised scores and activity codes 1/30/08 Implement initial phase of an automated case screening and selection process ~ 9/30/09 Complete implementation of the automated case screening and selection process D077 61 Exh.7 -- j',,'; - Related'Treasury -~.,i'. <'oi\~": ~. , . :. Related Treasury , ( .. -.. "",,p Strategy ....·~--',,:': FY 2008 $Y Strategy '..r; Component(s)t ,: J". -, ~:.~ Milestones Component(,s)l I _, '.- ' ath,es Initla~!.ves fli ~ '" ., _.~ ,:~.- I ~ = (Bold Prlmsll) (Bold__Primary) Expand AUR Auto Notice Generation to include additional 3 4 A all income types and a l l ' Form 1040 family returns. Evaluate the AUR matching process, and implement an improved case scoring and selection concept to select the most productive cases. to,,-'" ..~ ., <_.::-/' . . _ ... 4 ,', .... -.';',' f-"';;' ..;., .. 'r.. ":·. ).,I~ ~ • I 9/30/08 Expand the volume of auto notices bypassing the screening phase on 1040 series returns ."'" 'I - - . .. ;'" . FY 2009 - .~- .. '~: Beyond fY J~~ Milestones FY 2009 Mlletones ... _~'. :,FY 2009* ~ • _ --~',:.. - ,:. ' . 1 9/30/09 Expand the volume of auto notices bypassing the screening phase by including the entire ELF Form 1040 series and add cases from SB/SE inventories ~ Add withholding to the auto notice income issues in an effort to work the most productive cases 12/31/07 Reengineer the AUR matching process to improve coverage and maximize resource utilization resulting in increased AUR closures 3, 4 •.•. " 9/30/08 Streamline overhead costs by reducing manual screening 9/30/09 Implement additional improvements to workload (eg., selection tools (e.g., incorporating results as feedback to validate rules/score, and adding the capability to select cases for different treatments) 9/30/08 Complete studies and implement an enhanced workload selection system L -_ _ _ _ _ _ _ ' - - - D078 62 Exh.7 . ~~ :-=t~~~. _.• ~~ ~~~.. ~~': : _-: ~ .;-#J ~ ,," Initiatives : If.; • ..1,=: ,; '(. r~'." I .~ l Ui;.!1... : Related Treasury 'Freasury , Strategy . Stmtegy .. ,; Component(s)t 'Component(s)t Develop system requirements for expanding the AUR Soft Notice Test, which involves asking taxpayers to voluntarily self-correct for future years. Develop enhancements to the Compliance Data Warehouse to improve workload identification and prioritization algorithms, allowing better evaluation of alternative treatment streams and ensuring Collection cases receive the most efficient and effective treatments. (Bold =Primary) "~ FY200B FY 2008 Milestones '--::! w~·~ '" '. ' ~ '·.r-r·~ .,.,,"' ...... ' .. , . I , .... ]..,. " 9/30/08 9130108 Develop and complete programming requirements A 3,4 L .'Or i _;. ,;1. -, I' , ;'>,. . ~ ' r 1-'~"'tr I .,/:,: 'r .' , -. . ' , : ',"" j ~ ~"I' .~l ~:.'-~. ~ j FY 2009 FY2009 Milestones , 9/30109 9/30/09 Implement initiative for approximately 250,000 taxpayers ‘ 1/1/08 1 Release Phase 1 " . Beyond Beyond FY 2009 FY2009* ~ 1/1/09 Release Phase 2 3, 4 3,4 D079 63 Exh.7

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