Mr. Kenneth W. Gideon
Chief Counsel
Internal Revenue Service
1111 Constitution Avenue, N.W.
Washington, D.C. 20224

Dear Mr. Gideon:

As President of The Chicago Bar Association, I am writing concerning a matter we feel is important to the administration of federal tax laws. The Chicago Bar Association, at the instigation of its Federal Taxation Committee, herein formally recommends that the Internal Revenue Service adopt a remedial filing program in an effort to return numerous taxpayers to the tax rolls. As motivation for such action, we propose an objective standard which would protect the taxpayer from criminal misdemeanor prosecution for failing to file past due tax returns if the taxpayer complies with the directives of the proposed standard. This standard is as follows:

"A taxpayer who has not filed income tax returns for one or more years shall not be charged with any criminal offenses relating to such failure to file if the taxpayer does file income tax returns for those years which the taxpayer believes are complete and accurate provided (1) that these returns are filed by June 30, 1984, and (2) that the taxpayer or a related entity has not been contacted by the Internal Revenue Service nor has received any correspondence from the Internal Revenue Service relating to any of the years for which the taxpayer has not filed. If a taxpayer notifies the Internal Revenue Service in writing of his intention to file delinquent tax returns and does file those returns prior to June 30, 1984, the taxpayer shall be entitled to the protections of the program with respect to those returns. Nothing contained herein will have any effect on the imposition of civil tax penalties or the collection of tax, penalties and interest.

The purpose of this plan is to assist the general public by increasing the collection of taxes and to return numerous taxpayers to the tax rolls. We believe the Service can formulate this plan and present it to the public in a fashion to show the following positive aspects:

1. The Internal Revenue Service emphasis is on the collection of the revenue. The plan is meant to increase the number of taxpayers on the tax rolls and, correspondingly, increase revenue with proportionately minor administrative costs to the benefit of those taxpayers who are current in filing their returns.

2. Failing to file a tax return is a misdemeanor as opposed to filing a false return, which is a felony. Thus, the Service would not lose its primary prosecution cases.

3. In order to qualify for the plan, the taxpayer must file a return which he believes to be complete and accurate. If the returns are false, the taxpayer can be prosecuted for the felony of filing a false and fraudulent tax return. Thus, a taxpayer who elects this program stands in the same position as a taxpayer who has filed his return except that these delinquent returns filed under the program are more likely to be under audit scrutiny.

4. The remedial filing program applies only to criminal misdemeanor offenses and has no effect on the imposition of civil tax penalties or the collection of tax, penalties and interest.

5. The program has a defined termination date and is not open-ended. The proposed termination date of June 30, 1984 is flexible premised on the adoption date by the Internal Revenue Service. We recommend however, that the program be available for a minimum of six months.

6. From an enforcement standpoint, after the plan's termination date, the Service may argue that a convicted taxpayer had the opportunity to clean the slate by filing delinquent tax returns in accordance with the remedial filing program but he willfully chose not to do so. "

We believe this program can be successful since it applies an objective as opposed to a subjective standard to determine its application. A taxpayer must file delinquent returns or send written notice to the Internal Revenue Service prior to being contacted. Contact by the Internal Revenue Service means telephone, physical contact or correspondence with the taxpayer or a related entity, i.e., spouse, partnership or corporation in which the taxpayer has an interest. This objective emphasis is also understandable by the individual taxpayer as opposed to other suggested programs which promote interpretative nuances of attorneys. The plan is geared for national exposure through press releases, possible Internal Revenue Service assistance in the preparation of delinquent returns and perhaps even a cover letter with the form book mailed to taxpayers.

Prior to the submission of this plan to the Federal Taxation Committee and The Chicago Bar Association's Board of Managers, representatives conferred with our International Revenue Service Regional Counsel, Dennis Fox. Mr. Fox's commentary was of great assistance in defining the terms of the proposed standard.

Again, we request that the Internal Revenue Service review and adopt this standard in an effort to promote the fair administration of federal tax laws. We thank you for your cooperation and would appreciate hearing from you in this regard.

Sincerely, David C. Hilliard President

DCH/ss cc: Mr. Dennis Fox bcc: Dennis J. Carlin Burton H. Litwin Theodore A. Sinars

The Chicago Bar Association
29 South LaSalle Street
Chicago, Illinois 60603
Phone: 782-7348

Officers