WASHINGTON – Tax lawyers are concerned that a reorganization of Internal Revenue Service advisory committees could dilute the input of tax-exempt bond practitioners, though the IRS says the move will streamline and improve communication about tax issues.
The anxiety is arising out of the IRS’s Thursday announcement that the Advisory Committee on Tax Exempt and Government Entities (ACT), which has provided the IRS with recommendations on tax-exempt bonds for more than 15 years, will be absorbed into a restructured Internal Revenue Service Advisory Committee.
The IRS said that the new edition of IRSAC, which has existed since 1953 and was renamed in 1998, would focus on four subcommittees: wage and investment; small business and self-employed; tax exempt and government entities; and large business and international. IRSAC will also continue looking at other areas beyond those divisions, the IRS said.
Currently, there are about 50 members between IRSAC, ACT, and the Information Reporting Program Advisory Committee (IRPAC), which is also being absorbed into IRSAC. For the expanded IRSAC in 2019, there will be 36 members on the combined group. For the first year of the group, there will be three co-chairs for IRSAC, representing the incoming chairs from IRSAC, IRPAC and ACT. Beginning in 2020, there will be one chair.
IRS Commissioner Chuck Rettig touted the potential benefits of a centralized body to provide recommendations.
"As a former chair of IRSAC, I’ve seen firsthand the value this committee brings to the IRS and the tax community,” Rettig said. “The new committee structure will provide the tax community a bigger, more prominent platform to make recommendations regarding taxpayer service, enhancements in enforcement and utilization of technology. This new structure will continue to provide an important voice for the information reporting and tax-exempt communities.”
Perry Israel, a tax lawyer with his own practice in Sacramento, California, said some bond lawyers are concerned that the reduction in committee members and absorption into an existing body could mean less influence for tax-exempts.
“There is some fear that this is going to dilute down the impact on tax-exempt bonds that ACT has had,” Israel said.
“I’m not sure that there will be,” Israel said for the potential harm to muni practitioner influence, “but that’s a risk.”
The National Association of Bond Lawyers highlighted that risk in an alert sent to members.
“Many NABL members have participated on the ACT over the years and have worked on helpful projects important to the tax-exempt bond community,” NABL said in the alert. “The merger of the ACT into the larger advisory committee means that there will no longer be a targeted advisory committee specific to the issues we care about most, and appears to mean that there will be fewer members focused on those issues.”
Israel said that the impact could depend on the details of the reorganization. There was no prevailing sentiment that the existing organizational structure with separate committees was a problem, Israel said. There will likely be at least some budgetary savings for the government because the IRS pays for the travel expenses of advisory committee members when they meet with IRS officials.
The IRS had not made major changes to the advisory group process since the 1990s.
