Monday, November 12, 2012

Former IRS Commissioner Doug Shulman Gives Prepared Remarks Before the AICPA, Washington, DC

On November 7, 2012, Douglas H. Shulman, Commissioner of the Internal Revenue Service from March 24, 2008 through this past Sunday, November 11, 2012, in prepared remarks before the American Institute of Certified Public Accountants (AICPA) in Washington, DC, closed out his long tenure as IRS Commissioner with the following statement covering subjects including tax evasion, IRS efficiency, taxpayer improvements, corporate taxes, IRS technology, and more:

Side note:  In an interview with C-SPAN in January 2010, Commissioner Shulman stated, "I use a preparer... I've used one for years. I find it convenient. I find the tax code complex, so I use a preparer.”

IR-2012-89, Nov. 7, 2012

WASHINGTON — Today is the day after the elections and of course, political Washington is all abuzz…bloggers are blogging…commentators are commenting… folks on Twitter are tweeting… the pundits are dissecting last night’s results.

However, I am not here to wade into those political waters. Rather, I come before you today to talk about something entirely different.

In a few days time – November 11th to be precise – my term as the 47th Commissioner of the Internal Revenue Service officially comes to a close. And looking back, I can say it has been a true honor and one that I wouldn’t trade for anything.

I suppose it’s quite natural when one has completed a significant task like running the IRS for almost five years to pause ... to reflect on the journey taken … to mark the milestones met … and to ponder the lessons learned.

Standing before you today…standing on the shoulders of those who came before me…building on their work and achievements…it is gratifying to share with you the meaningful…and I believe, lasting progress that has been made to our nation’s tax system.

People often ask me, “How do you drive change and significantly move the needle in an organization as big as the IRS?” Two of the key factors are to set the right strategy, one which people believe in and you can explain, and then to stay focused.

I’m a believer in a relentless focus on priorities – not getting distracted by too many crises or incoming demands – and making sure that you communicate these priorities clearly inside and outside the institution that you run to ensure there is broad support and engagement among stakeholders.

This is much easier said than done – especially in a government agency – but staying focused and consistent over multiple years is a key to success.

Today, I want to share with you some of the results of almost five years of relentless focus on a handful of strategic priorities we set for the IRS. The priorities are:

•           Creating breakthrough strategies to combat international tax evasion;
•           Transforming our relationship with corporate taxpayers;
•           Transforming the IRS’ core technology;
•           Rethinking and reimagining the IRS’ relationship with paid tax return preparers;
•           Leveraging data analytics for continuous improvement;
•           Driving efficiency and taxpayer service improvements; and
•           Positioning the IRS workforce to make sure we are prepared for tomorrow’s challenges.

So, let me begin with our efforts on the international front.  Both corporations and individuals operate in the global economy, as corporations seek out new markets and individuals have global exposure through their investments, including retirement accounts.

Yet, this fundamental shift to a more global economy has created a real set of compliance challenges for the IRS. On the individual front, we have made putting a big dent in offshore tax evasion a major priority.

We view offshore tax evasion as an issue of fundamental fairness. Wealthy people who unlawfully hide their money offshore aren’t paying the taxes they owe, while schoolteachers, firefighters and other ordinary citizens who play by the rules are forced to pick up the slack and foot the bill.

Over the past five years, we have significantly increased our resources and focus on offshore tax evasion, and the results have been substantial. We upped the ante in a meaningful way with our work on Swiss financial institutions – where for the first time in history, a bank secrecy jurisdiction turned over thousands of names and account numbers.

As we increased our enforcement efforts and gained significant momentum, we gave taxpayers a chance to come in voluntarily and avoid going to jail. In a typical year, we used to get 100 or so taxpayers who used our voluntary disclosure program. When we first set up our new program in 2009, we thought that figure would rise to maybe 1,000.

So we are very pleased that we’ve had approximately 38,000 voluntary disclosures from individuals who came in under the special programs.

To date, these individuals have paid back taxes and stiff penalties amounting to more than $5.5 billion, and the number continues to grow. We are mining the information we have received and have launched our next wave of investigations on banks, bankers, intermediaries and taxpayers.

Collecting additional revenue for past misdeeds – as important as that may be – is not the only, or even primary, consideration here. It’s perhaps more important that we’re bringing U.S. taxpayers back into the system…back into compliance… so they properly report and pay their taxes for years to come. We have fundamentally changed the risk calculus of taxpayers who are thinking about hiding their money overseas, and we are well on our way to deterring the next generation of taxpayers from using hidden bank accounts to cheat on their taxes.

We’re also transforming our relationship with corporate taxpayers…many of whom operate in a global environment.  Even before I became Commissioner, I was aware that the relationship between the IRS and large corporate taxpayers was frequently unconstructive. One of the assumptions built into the dynamic was the so called “adversarial relationship” between the IRS and the taxpayer. This was one of those “givens”…the relationship would never change.

I have always challenged this basic assumption. The historic framework for the nation’s tax laws is a system of voluntary compliance. Our tax system is set up in such a way that taxpayers fill out their own returns. This self-assessment system reflects the fact that it is the taxpayer, and not the IRS, who possesses all of the information relevant to tax liability. We then use information reported by the taxpayer to make judgments about issues to pursue, and returns to audit. Inherent in this system is the basic assumption that the taxpayer will be forthcoming and the government does not need to be an “adversary” in most situations.

See entire original article here.

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