1. Reduction in the Complexity of Internal Revenue Service Forms

The Service has made great strides by simplifying the short form and by developing Form 1040EZ. These forms have been accepted by the public as a definite improvement.

The purpose of the Short Form, and for that matter 1040EZ, will be defeated if the code is constantly changed to allow taxpayers special deductions even if they don't itemize their deductions. By allowing deductions to taxpayers who don't itemize their deductions the Service will end up with three types of long forms, instead of the one now commonly used.

The National Association of Enrolled Agents wrote the President after his State of the Union Address, requesting that he not propose any further changes in the code until a sustained economic recovery is under way. The simplest way to make tax forms easy to use is to stop what appears to be the annual revision of the code. The membership of the National Association of Enrolled Agents recommends a moratorium through 1984 on any further changes in our tax laws, the only exception being technical corrections. Taxpayers need a breathing spell. Just when the public becomes experienced in using certain forms the laws change.

The irony of some changes or proposed changes in the code is that some of the changes don't have any tax effect on a taxpayer's ultimate tax liability even when these special deductions are claimed. A case at point is the $25 charitable deduction that taxpayers may claim even if they don't itemize their deductions. Since the short form tax table increases at $50 increments the Internal Revenue Service estimates that 50% of the taxpayers claiming this deduction will still remain in the same $50 incremental bracket and as result the deduction will not have any effect on their ultimate tax liability.

2. Paper Reduction Act

This act has been monumental in reducing the number of forms that small pension plans were required to file with the Service and the Department of Labor. In this area the Paper Reduction Act has been extremely effective.

Our organization hasn't observed any major paper reduction in the basic forms the Service still requires to be filed in the area of income taxes. A lot is still to be accomplished in this area. There has been a reduction in the amount of information required when it comes to filing employment tax forms. The Service annually holds hearings where it invites public comment on ways to simplify or streamline its forms. On May 5, 1983, such public hearings were held in New York, Indiana and Texas. The Service should be commended for this type of program.

The Internal Revenue Audit Manual should speak to the issue of the unnecessary documentation tax agents require during the course of a tax examination.

We realize that withholding on interest and dividends is a politically charged issue; but, I can think of no other piece of legislation that could be designed to completely undue the progress made under the Paper Reduction Act. Congress, in reducing the flow of paper at one end, would be pumping in huge amounts of paper at the other end by not repealing withholding on interest and dividends. The position of the National Association of Enrolled Agents is clear on this point.

3. Taxpayer Assistance Program

These programs should be maintained with one modification. It should only be available on a one to one and group basis. We believe that Commissioner Egger is correct in not wanting to provide individual telephone assistance. Many paid tax preparers take the easy way out and reach for the telephone when they have a question. The Service should continue to implement its Tele-Tax information program.

4. Timely & Accurate Internal Revenue Service Advice

With the exception of the Problems Resolution Office it currently takes three months or better to receive a reply to correspondence directed to a Service Center. Many times the matter is in the hands of a collection officer before a reply is received. Through my service as a member of the Commissioner's Advisory Group, I am personally aware of Commissioner Egger's dedication to the reduction of this response time.

Field agents are routinely assigned or reassigned to other areas in the middle of a tax examination. It is not unusual for agents to stretch out tax examinations for one or one and a half years because they were pulled off in the middle of an audit, and accordingly taxpayers find themselves in a state of limbo. Such delays necessitate the Service's need to obtain waivers of the statute of limitation. Again, more paper.

In the past year our members have noticed that it can take three months or more to receive a final report from an agent after the examination has been concluded.

5. Non-filers

We believe that the Internal Revenue Service should explore the granting of amnesty to non-filers whose assets or whose non-reported income is below certain levels. In 1982 the Commissioner's Advisory Group, recommended this to the Commissioner as a way of bringing non-filers back into the system. Prior to 1952, the Service had a voluntary disclosure program. Pursuant to the information gathered by the King Hearings before the Subcommittee of the House on Ways and Means that were held in January 1952, the Commissioner discontinued at that time its program of voluntary disclosure. While I understand Commissioner's Egger's reluctance to grant blanket amnesty, the Service should actively explore ways to bring the non-filer back into the system. It seems the underground economy is the fastest growing segment of our economy.

Thank you.

David J. Silverman
Committee Chairman
866 United Nations Plaza
Mew York, N.Y. 10017
(212) 752-6983