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Music Playing >> ANDY: Hello, everyone. Welcome to Appeals Practitioner Perspective Series today, a conversation with Examination Appeals.

I'm glad you all joined us today. We have some outstanding practitioner guests joining us for this conversation today and some outstanding Appeals leaders who you're familiar with that are joining us today.

We look forward to talking about a variety of issues affecting Exam Appeals.

You will recall we have done one of these before, the focus was on Collection Appeals, and today, of course, the focus on Exam Appeals. I think it's great that practitioners are willing to join us for these and to add their perspectives to working taxpayer cases with Appeals, and so glad to have them with us here today.

I'm going to introduce our Acting Deputy Chief of Appeals, Shahid Babar and ask him to get started with introductions, take it away.

>> SHAHID: Thank you, Andy. And our Chief, Andy Keyso, obviously needs no introduction.

We know him. We have really good panel today.

We have three or four external tax practitioners and three Appeals panelists and I will start by introducing our director examination, Exam Appeals, Darlena Billops-Hill who recently joined Appeals as the director, Exam Appeals and she's working out of our Detroit office.

Prior to joining Appeals, she served as director field operations in North Atlantic, northeast compliance in the LBI Large Business and International Division and she held several other leadership positions across IRS.

She holds a master's degree in taxation from Walsh College and she’s a graduate of the IRS summer 2018 candidate development program. She will be co-moderating the panel today along with Andy.

Our practitioners, Mary Gillum, she’s an attorney and the director of the legal aid society of middle Tennessee as clinic director she supervises law students who represent low-income taxpayers before the IRS and the tax court.

Her current practice includes federal income tax controversies, bankruptcies and collection defense.

She is also a member of the Tennessee bar association faculty and provides legal seminars to attorneys throughout the state.

Next is Tom Greenaway. Tom is an attorney with KPMG LLC and a leader of KPMG's Tax Controversy and Dispute resolution group in New England. He’s also the vice chair for the continuing legal education of the American Bar Association tax section.

Before joining KPMG, Tom practiced as a senior attorney in the large and midsized business division of the IRS office of chief counsel. The third panelist is Kevin Stults, Kevin is an attorney with the Skadden Arps in Washington, D.C. He is also the vice chair of the American Bar Association section on Taxation Committee on Administrative practice.

His practice is concentrated on federal tax controversy and litigation.

We are really excited and happy to have these three practitioners join us today for this panel and I will read this disclaimer that the IRS, we selected topics for today's panel by considering feedback from relevant professional associations and employees and the independent office of appeals.

The practitioners on this panel have demonstrated experience in these topics and that is why we selected them.

They are not receiving compensation for being here today, and with that, I will pass it onto Darlena who will introduce Appeals panel and will kick it off from there. Thank you!

>> DARLENA: And good morning, everyone. Happy to be with you here today for this practitioner panel.

I'm going to introduce our panelists from our Appeals examination area and first up is Ann Gilbert.

Ann has been with Appeals for six years and works out of our Boston Massachusetts office.

She is currently the director of area 5 in Examination Appeals and she's responsible for overseeing operations in our northeast field and campus locations.

Ann has been one of our mainstay presenters at the Annual Nationwide Tax Forums and will be serving in that role again this year. So, thanks, Ann.

And Reinhard Schmuck has been with Appeals for 16 years and works out of our New York office.

He is the Director of our Appeals Team Case Leader Operations and in this role, he has nationwide responsibility over administrative Appeals of our largest and most complex cases in Appeals.

Reinhard also serves as an adjunct at Baruch College where he has taught a variety of tax classes at the graduate and undergraduate level. Thanks, Reinhard.

And Jessica Talbot has been with us for 21 years and she works out of our Ogden Utah office.

Jessica is one of our Subject Matter Experts in the docketed workstream and has a wealth of experience with all of our examination workstreams as well as our processes and procedures, so thank you, Jessica. Andy, I'll turn it over to you.

>> ANDY: Thank you, Darlena. Yeah, this is a great panel, and I think Shahid mentioned it, but a lot of topics we will talk about today are originated with suggestions that you all made across Appeals when we teed this panel up, so we are happy to hear that from you.

Of course, we welcome by text chat if you want to submit any observations on the discussion or any questions that you want to tee up, we will plan to take some of them, as time allows, throughout here.

So send your text chats to Amy Guiliano who will collect those during the session.

And we will break every now and then to see if there are any observations or questions that we have time for, so send the text chats to Amy Guiliano and let's jump in and get started.

You see it there, the mission of Appeals to resolve federal tax controversies without litigation on a basis which is fair and impartial to both the government and the taxpayer, promotes a consistent application and interpretation of, and voluntary compliance with, the federal tax laws, and enhances public confidence in the integrity and efficiency of the Internal Revenue Service. It is interesting and a broad mission there that the Office of Appeals has in our segment 1 here we will focus on what is the role of Appeals in light of that mission statement and how do we apply hazards of litigation? So, let's jump right in here with segment 1.

I guess I would start with our practitioners and say looking at that mission statement, I sometimes hear folks say well, the job of Appeals is to get to the right answer or to find the right answer.

I always wonder about that, and what does somebody mean when they say that?

I'm hoping people don't mean that either the government, the IRS compliance has it right or the taxpayer has it right. There's one right answer there and it is an all or nothing case in favor of the government or the taxpayer.

That would pretty much put us out of business in Appeals here because I don't think that's typically the case with the tax law.

I would tee it up to Kevin, Tom, or Mary, any of whom wants to get us started here.

What do you view as the role of Appeals in this agency?

>> TOM: Andy, let me start. This is Tom. First, thank you and your entire team and your whole organization for putting this panel together. I really do appreciate the chance and it's an honor to obviously talk to this group.

I agree with you 100% on the mission of Appeals, Andy.

Appeals does a really important job for tax administration, resolving 80 plus percent of the unagreed cases that come through its doors.

And in order to do that, of course, you have to try to predict the future and, in my view, in terms of what's going to happen if this case were to go to court. And in my view, I 100% agree with you that the right answer is not black or white. It's somewhere in between.

That's hard to do, and it's a tough job, but it's absolutely an essential job in our system of tax administration.

>> ANDY: Kevin or Mary, any other thoughts there?

>> KEVIN: I would just echo Tom's comment. Happy to be here today and appreciate the invite to speak.

I think one thing that's just important to realize is that taxpayers and their representatives understand coming into Appeals that we don't believe there should always be 100% win for the taxpayer.

Part of the function and reason for Appeals is that these issues are difficult, they are often complex, and it is often unclear despite the code and regulations as to what the right answer should be applied to the facts.

So I think that it's, you know, we enter into Appeals with the idea of evaluating hazards for litigation which is obviously a subsequent step, we enter with the same mindset of evaluating hazards, figuring out what a reasonable and fair settlement is, and we look forward to, you know, in the discussions and conversations with Appeals, whether it is ATCLs, Subject Matter Experts, counsel that are on a case, I think it's important that everyone have that same mindset, that the goal is not to walk out of their with 100 percent victory.

The goal is to come to a resolution that everyone can live with and that is appropriate and avoid, frankly, the need for the cost and expense of litigation for taxpayers down the road.

>> ANDY: Thank you, Kevin. Mary, if you want to come on camera, what is your goal when you come to Appeals or the role of Appeals, what are you trying to accomplish when you come to the clinic on behalf of a taxpayer?

>> MARY: Right if you will bear with me, I'm having a little bit of technical difficulty at the moment, but I would agree it's a balancing test when you are finding the right answer as to whether that is your goal or hazards of litigation; but most taxpayers, if you look at it, if you look at the statistics, if the United States tax court, most taxpayers going before the United States tax court, 80% are pro se and representing themselves and they really don't know how to articulate their case and a lot of times they may not know how to prove their case.

So I really think it is a balancing act and echo what I have heard.

Finding the right answer is very important to the taxpayer, it's very important to me as a practitioner, but I mean, one of the things that the court takes into account if the case doesn't get settled or the docketed case doesn't get settled with Appeals is, I mean, they are looking at all the factors.

Hazards of litigation I think is very important, and I think that really finding a balance between both finding the right answer in it and looking at hazard of litigation is key to having a successful resolution of the case.

>> ANDY: Thanks for that Mary. I want to turn back to Tom Greenaway before I turn to Reinhard and ask Tom, Mary mentioned hazards of litigation, I think there is a tendency when you think about hazards of litigation when you think about legal hazards, hazards as to how the court would interpret the law.

That is not the only hazard we face but there may be factual hazards in this case and how do you address that when you come to Appeals.

>> TOM: Again Andy I 100 percent agree with you, and one thing I try to explain to my clients and I certainly hope it is a shared view across this audience is the IRS has a well-deserved reputation for understanding and interpreting the tax laws. That's the job of the IRS and the national office, so in general the IRS has an advantage on the law. Not to say there's not smart practitioners out there in Kevin's firm, my firm and other firms, but the facts are what drive the result in almost every case and the taxpayers, for better or worse, own those facts.

And sometimes the government will put in time and effort to discover their own set of facts but in most cases the taxpayer has a massive advantage in terms of understanding the facts of the case.

And I fear that sometimes Appeals in particular doesn't appreciate that, whether, you know, it could be as simple as an individual taxpayer who is willing to put her hand on a Bible and testify in court under oath as to, you know, whether or not she provided 50% or more support for a dependent.

Well, could be much more complicated than that. It could be transfer pricing or something else but whether it is substantiation or evaluation or even transfer pricing, these are all factual determinations.

>> ANDY: Thanks for that Tom, I want to turn to Reinhard. Reinhard, thoughts on any of that?

Do we focus enough on factual hazards in Appeals?

>> REINHARD: I think these questions are not mutually exclusive.

The right answer, litigating hazards, factual hazards, legal hazards, I think they all come back to what is the right answer or what I often like to say roughly the right answer because typically I think an Appeals officer will look as a range of hazards and then try to settle the case.

I think Tom makes an excellent point, and I tell my students that quite often.

Your future clients are in control of their facts. I mean, just something as simple as do I sell my stock at one year or do I sell it at one year and one day to take advantage of long-term capital gains at preferred rates?

I do think though that naturally the factual hazards, taking the very simple example, I would say a penalty defense, exam let's say raises a penalty, maybe they don't focus in on whether or not the taxpayer had substantial authority. Maybe their focus now becomes on whether or not there was a reasonable reliance on legal advice, say, from outside counsel. The facts now become is that reliance reasonable?

And that could vary obviously based upon the the certain experience, education level of the particular taxpayer.

I would expect that to be front and center in a case in Appeals.

Raised in the RAR that the reliance on that opinion was not reasonable and I would expect as well the practitioner or the taxpayer to refute that with an adequate argument so I think that the factual hazards I think naturally will come out in our final -- in our consideration to determine the final hazards of litigation.

>> ANDY: Ann, how about your thoughts on there? What should Appeals officers look for in terms of determining whether there are factual hazards if the case were to go to tax court?

>> ANN: I'm glad you asked that and I wanted to thank Mary for her comments because I wanted to advocate for a minute for our pro se taxpayers. When we say facts, we assume the taxpayer understands what they need to bring forward as a fact to support their position on the tax return and it isn't always clear.

All the time taxpayers tell us well, I told compliance this, I gave them this information, and they do not understand why that isn't a winning fact or position for them.

So, for those taxpayers, Appeals provides a good educational opportunity to explain to taxpayers what is a fact?

What does the law say? What would a judge look at if this particular issue were to come in front of them?

So, for our smaller cases, especially on the campus, facts really carry the day.

What did the taxpayer know on the day they filed their tax return or took that tax position that they could demonstrate compliance with the rules? So it's very important for us, especially again, not the ATCL work and the cases that Mary is talking about where people are pro se to make sure that they understand when we say facts, we are not the champion of the facts. They do own their facts.

We don't ask questions to develop facts, but we will help them understand what fact they might need to bring forward to be successful in Appeals.

>> ANDY: If facts are very relevant here, then it would seem obvious that not every case involving a particular deduction can be settled the same way, right? Not every research credit case can be settled that, well I settle all research credit cases at this percentage or I settle all passive activity loss cases at this percentage.

The facts and the potential for factual hazards or maybe facts not fitting neatly into decided case law can result in a different settlement as between two taxpayers both who have pretty much similar research credit cases, if you will. Tom, you have talked in the past about that sort of balance, between well we want to treat all taxpayers with the same issue consistently or fairly, but on the other hand, facts vary and that might mean not all research credit cases are settled at the same rate, right?

>> TOM: Yeah, exactly right, Andy. And I guess my suggestion here is more of a process point than anything else. In our legal system, we give great deference to the fact finder, the person who is closest to the facts and here I would urge Appeals officers who will have that responsibility over a case and their management to say okay, if you are the person who's engaged the most with the facts, then I'm going to let you listen to, make those credibility determinations and weigh those facts and make sure that each of the specific facts of each specific case are coming out and being weighed appropriately in this hazards determination.

Conversely, if there are other people involved in the decision-making process whether management or technical specialists, it's really important for us as practitioners to be able to speak directly to those people.

That's really important. Of course, it could be virtually, but make our case directly to the person who holds the keys to the case.

>> KEVIN: Andy, just picking up on this, I think one of the things that I know representing taxpayers we struggle with sometimes is that the audit is naturally from the taxpayers perspective a reactive process where we get IDRs, we get questions, we get inquiries and there is always this tension between providing information to an appropriate level but it is very different than in litigation where you're putting on your affirmative case, you're setting out the facts affirmatively and we certainly appreciate that Appeals has to deal with the factual record that's delivered to it and things in recent years such as the acknowledgment of facts IDR, of refocusing on the idea that Appeals is going to have to kick back something when the facts aren't fully developed.

One thing I try to do with my clients and taxpayers is again, when we get to Appeals, we need to get in proactively the facts that we think are helpful and through the course of the exam, you need to make sure that you have things in there so that Appeals can see and can evaluate, as Tom just said, the factual situation.

And there's always a balance there between not providing facts that Exam is going to say oh, that goes to an issue I haven't audited yet.

I will look at that issue because they think that's important, but at the same time making sure that you're not stuck with Exam's versions of the story because they have scripted how the facts have been developed.

>> ANDY: Good point. Ann let me bring you in here off of mute for a second to that point about establishing facts in Exam that Kevin raises. It raises questions to me about burden of proof. What should on Appeals officer look to if the taxpayer has established certain facts while the case is in Examination can we assume the taxpayer gonna establish those facts if the case were to get into tax court. What if the revenue agent has a different view of the facts?

How do we handle that in Appeals?

>> ANN: Well right, that's a good question. We start our work at the end of the Revenue Agents work or the Stat notice.

So, we have some development that took place in Compliance and now we are here to talk to the taxpayer.

This is the taxpayer's chance to tell us how Compliance got it wrong and in what way they got it wrong.

So, to the extent that Compliance has relied on a certain set of facts to reach a determination of proposing an adjustment, now it's the taxpayer's turn to tell us. And we are clear with our taxpayers about where we see the burden.

Where the burden lies in the case of a deduction. Where the burden lies in a case of an income item and how we can work with them. Again, for the pro se taxpayers, we think we make a very valuable contribution to explain to them how this is going to work and what it means to carry the burden and what it means to provide information and we have lots of examples where a taxpayer truly feels that they have brought forward, I sent my check in, I showed I made a charitable contribution, and yet Exam didn't let me have it and we say you need to go to the services letter. You didn't understand the requirement.

Although you feel you may have brought forward the fact, we are telling you it was incomplete.

So, it is not our role to evaluate the work done by Exam.

They have done what they did, they brought forward an argument.

We will listen to the taxpayer's argument and we will make clear to the taxpayer what their obligation to support their own position would be, and then again, we try to evaluate hazards and decide which of these two arguments would win if the case would go forward.

>> ANDY: Good point, talking about our role here is very helpful, and I want to turn to Reinhard and ask about our role in another context.

If the Office of Chief Counsel has issued legal advice in a particular taxpayer's case, if a Chief Counsel Advice or CCA as we call it, what weight does that have?

It is issued on this particular taxpayer case that's now pending in Appeals.

It was issued maybe at the time the case was under examination.

How does Appeals look at that CCA? Is it binding on us or is it Gospel? We must follow it?

Or what is our view there?

>> REINHARD: I think it is clear it is not binding. That's our current administrative guidance that Appeals has the responsibility to independently evaluate not only counsel advice we have obtained but also advice provided to exam so we do routinely hazard positions taken in a CCA.

I do think, however, I do think the tendency is to kind of treat it as informal precedent even though it is clearly labeled as does not constitute precedence in the sense that someone in national office has given this some deep thought, has put it in writing, and realizes even though it is in a redacted version that it will be shared throughout the taxpayer and practitioner community.

I do think we view it seriously. I think ultimately the hazard determination comes down to is the CCA logical, is it based upon, you know, foundational principles or well-established principles of tax law?

And then from that we would flesh out the hazard and make a final hazard determination to settle the case.

It is not unusual in any respect shape or form that we just simply accept national office's position at CCA.

That does not happen. We do give it serious consideration and try to determine the hazards.

>> ANDY: Kevin, your observations if you face a CCA in this particular taxpayer's case or maybe you can talk a little bit about what an Appeals Officer has found a CCA floating around out there on Lexis or Westlaw not issued in this particular taxpayer’s case but a very similar fact pattern and issue.

>> Reinhard: I think it goes back to the thinking of national office.

Now that thinking could change over time, but there is some subsequent CCA or TAM that has changed the position taken in that particular CCA not issued to the taxpayer.

Again, I think it will go back to the logic, persuasiveness of the reasoning, the legal authority cited within the CCA and will ultimately determine the hazards.

Has it been adopted in other cases? Is it a unique standalone issue?

These are all factors I think that will enter into it, and I will also add which I probably should have said in the beginning is that CCA sometimes there are factual differences that I think it goes back to the factual hazard piece that the taxpayer may not have, let's say, been involved with the factual conclusions upon which the national office ruled and issued that CCA so there could also be that factual hazard aspect which really could conceivably turn the whole CCA on its head all together. So, I do think we do need to really take them seriously and analyze, consider the taxpayer, the practitioner arguments as well as exam arguments in order to determine a final settlement of the issue.

>> ANDY: Kevin, your thoughts there on CCAs?

>> KEVIN: Sure. I think the way I think of a CCA is it is the litigating position of the IRS in support of Exam.

Even if it is technical advice memo where the taxpayer has been involved in the factual statement process, it is still the position that the IRS to Exam would take in litigation which in some respects to me is no different than an Exam's position during the audit. I think from a practical perspective, it does seem to carry more weight, especially if Appeals is involving chief counsel as an adviser in the Appeals process because again then you have someone from chief counsel sitting in judgment on somebody else from chief counsel's position.

But I think I have been involved in Appeals situations where there's been a CCA and we, taxpayer has gotten is 100% concession from the government and vice versa, so I think it's important to put it properly in its place, that one, as you said, Reinhard, facts matter. Facts are very important, and especially if it is a CCA for a different taxpayer it's different facts and may have a different outcome and too, on the law, it is certainly a position of the national office or chief counsel on the issue, but that again doesn't mean that there is zero hazards of litigation to that position.

I think it's important for Appeals to recognize that, you know, in a court, the court would hear that position and give it the weight it was due but there will also be a position from the taxpayer's side.

>> ANDY: Thank you for that, Kevin. Let me stop here and bring Shahid Babar in and April Adams Johnson and see if they see anything in the text chat by the way of observations or questions that they want to bring up now?

>> SHAHID: Hi Andy, We do have two questions not totally relevant, but one of them I will just read to you.

We got it in the text chat and it talks about we have seen cases where representatives, they tell their clients not to answer document requests issued by Exam. In those cases, I have to tell those same representatives that they have not shifted the burden to the government and I have to tell them if a representative responds to a document request in Appeals, I have to send the case back. Is there a benefit in not answering a document request at the Exam level before a case comes to Appeals?

>> TOM: Let me take that one. The answer is no, and the question is framed perfectly that Appeals Officer is doing exactly what he should be doing there.

I tell my clients the same thing Kevin said. You may not want to just share everything under the sun with the IRS.

It's very much a reactive process of dealing with the audit function if Exam asks a question, we answer that question but there is -- I can almost -- I can't think of a situation where it makes sense to get into that loop of, from Exam to Appeals and to Exam to Appeals. I mean, part of it is an education process.

Part of it honestly is a factual development process.

Sometimes these facts just come to light later and that's just the breaks and we understand we have to go back to Exam.

There's no practice in the practitioner community of, quote unquote, hiding the ball until you get to Appeals.

If I could get one more point on hazards before we leave and to hover on the without litigation piece, Andy, of the mission. It's really important to me, obviously, with my clients to think about how much it's going to cost if our client goes to litigation, and I would just encourage all of the Appeals officers on the call to more or less take that out of the equation as you're evaluating hazards because -- I'll use as an example of a TC summary opinion case decided last week, the Romano case. The main issue is whether $2,000 worth of uniform expenses were deductible and of course if that taxpayer was rational about it, rather than hiring an attorney and going to trial, which I'm sure cost more than $2,000, she would have conceded the case 100% but she won that case, or at least won that issue.

So, I think it is important for Appeals, if you're going to stay true to that without litigation mission to take that thumb of the litigation expense that's definitely weighing on the taxpayer's mind off the scale of evaluating hazards.

>> ANDY: I appreciate that Tom. Mindful of the time, I want to transition us and thanks for the question from the text chat Shahid.

I want to transition us over to Darlena to get us started on the discussion of independence, our segment 2 here.

>> DARLENA: So, we’re going to talk a little bit about independence, and as we all know, in 2019 we have the Taxpayer First Act and it codify the independent Office of Appeals. So it's important that we conduct ourselves in a manner that is independence of the IRS compliance functions, and it's important that taxpayers see us as independent, not as an extension of the compliance function.

So Mary, I'm going to start with you and ask what role do you think during the first conference or conversation with the taxpayer, what role does that play in stressing this independence and how can we in Appeals take, or do you think we take it for granted in Appeals that everyone knows that we are independent? And what exactly does that mean?

>> MARY: I find that Appeals Officers, they understand it's important to explain to the taxpayer that they are independent, the opening letter that goes out from IRS Appeals explains that but here's where I think there is a disconnect a little bit is that because Appeals has done that. They have sent out their letter generally explaining that they are independent in the opening letter, but the problem I see with, and the disconnect, is that the taxpayers, often letters are written at a level that a lot of the literacy level of a lot of the taxpayers I know that we work with, don't, can't understand or comprehend what that means.

So I really think it's important that IRS Appeals if they spend time putting the taxpayer at ease and really explaining orally what that independence means and what the IRS is doing so a little bit of investment in education process for the taxpayer when they are on the phone I think goes so much further than just the opening letter saying that we are independent.

I think it's important when talking with the taxpayer to really distinguish Exams versus Appeals approach, and that what the goal and what the job of Appeals is because many taxpayers will not open up if they, you know, when they hear the word "examiner" and they think the Appeals is just an extension of the Exams office and it is because many taxpayers have had bad experience with Exams.

Maybe to their own fault because they haven't responded to Exams, but I would really, putting a taxpayer at ease, having empathy with taxpayers are important and taking time to tell the taxpayer to say tell me your story and what's going on and why do you think you are entitled to what you're claiming here.

And once you get stories from the taxpayer -- and this is the approach we take in our office because the taxpayers don't warm up to us even though we are their representatives. After they tell us their story, I go into probing and I start asking questions and following up based on the information they gave me in their story.

Once they have taken ownership and given me their story, I find it puts them at ease and I'm able to get the information and ask probing questions that are not -- it doesn't -- the taxpayer will open up and feel more comfortable.

I think at that point, when the taxpayer is saying here is my story and here is why I think I'm entitled to this, and if Appeals takes a more proactive approach and proposing alternative sources of proof because I found as practitioner that's where the breakdown is as well because they have gotten away from Exams or typical sources of proof and their proof does not fit in a box and Appeals is well, I see what you are saying, and here is maybe where you don't have school records, but here is another way that maybe we can get, you know, your pastor or someone, your clergy person, maybe there is an affidavit we can consider where they know your situation.

But Appeals, it is a lot more work, and I understand Appeals is already overwhelmed right now with so many cases, but I think that's where you see going from a successful resolution to not successful resolution is if you give the taxpayer time to tell their story, probe for information. Once they tell their story and be proactive in proposal alternative sources to proving the case, I think that is some of the things.

I know that we utilize in our clinic to try to get the full story from the taxpayer.

>> DARLENA: Alright thanks Mary and Ann, what do you think about the first role of the first conference and stressing independent from the taxpayer.

>> ANN: One of the issues that we have, by the time we get on the phone or the conference with the taxpayer they are upset. Something hasn’t gone right, they don't necessarily understand why they ended up where they did and for them, for many, I think Mary, probably Mary, the overriding issue is they can't pay the tax and they really don't know how to express to you, I don't care what the facts are.

I can't pay this, and so we emphasize with our Appeals Officers that we are assessment people on our side of the house, Examination Appeals. We are just trying to understand what the tax return should say, what the correct tax would be.

So, we do start out by explaining that we aren't Compliance.

This is not the Examination function and we will not go back and speak with the Examination function and we do take time, I hope, to educate them and explain to them what we need to hear to understand their position and we work hard to overcome. Again, so many times what they really concerned about is something else or they really can't understand or they believe somebody else was entitled to this deduction; so for us, education is a huge part of making taxpayers comfortable that we are in fact independent and that we are here to listen to their set of facts and their information and that we do communicate to them what we would need to hear, what they could provide to us that might prove their case.

>> DARLENA: From a practitioner point of view -- and of course this question is going to be for Mary, Kevin and Tom.

What are the best practices in your point of view that Appeals can apply in order to give taxpayers comfort that we are truly independent of compliance? The compliance functions over the service.

>> MARY: I'll go back to say what I was mentioning earlier is let the taxpayer tell their story.

Once they feel like somebody is listening to their story, they open up and actively listen just as they are telling the story, don't display judgment. That's hard for me, even though I'm the taxpayer's representative, but not to display any judgment, and, you know, become a clear from the beginning like Ann was mentioning, you're not following Exams directives. You're taking a fresh view with review of the case and I think that's real important.

And then going over to kind of what's in the file, because a lot of taxpayers maybe assume Appeals has certain records that never made it to Exams or didn't make it from Exams to Appeals or never made it from the taxpayer to Exams so just a lot of times that's real important to go over I think in critical and development in the case and then help the taxpayer develop evidence to prepare the case. Like I said, looking at the other sources, if what they have sent in is not sufficient, explain why.

Because exam does a good job of sending letters saying you sent this record and doesn't prove the child lived with you, and the taxpayer is really frustrated that they have to go to the school to get copies, but the records didn't have periods of attendance that showed the time period for the qualifying child definition. For example, for section 152 or 32 for Earned Income Tax Credit.

I think that is, whereas Exams is a letter saying this is not good enough saying to the taxpayer well this is what's wrong with what you sent in or here is what additional information we need. But letting the taxpayer tell their story is really key.

>> ANN: I do want to be careful about this idea that the Appeals Officer helps the taxpayer develop their position.

We absolutely are tasked with explaining the position that exam took, we are absolutely tasked with explaining to them what the rules are.

We do not issue IDRs, we do not ask for questions, we don't argue with ourselves.

So I just want to be careful about -- again, we tend to blur that line a little bit more when the taxpayers is pro se but we don't as a practical matter help anybody develop their position but rather we explain to them how one might develop a position or what information might be needed to prove a point. I wanted to clarify that.

>> MARY: Yeah. And to follow-up on what Ann says, not like developing a position so much but it is developing or looking at the alternative sources of proof, because again, the taxpayer is somewhat pigeonholed and Exam is trying to be helpful giving a list of documents, but they don't have those documents, but they have other documents, and they help explore what other documentation is available that they can get to persuade appeals that they are entitled to what they are claiming.

>> TOM: Let's just use substantiation. Exam takes a pretty exacting standard when it comes to a substantiation case and everybody on this call understands that the Cohan Rule was available and cited in the TC summary opinion I mentioned earlier.

The taxpayer doesn't know about the Cohan rule, but with the Appeals Officer and pro se case, you can say I understand Exam wanted more proof, and I believe you, and I'm sure every single person on this call has an Appeals case memorandum, dozens in their file that say petitioner credibly established XYZ.

So, I don't view that as developing the taxpayer's case, but it is part of hazards analysis.

If this individual goes to court, what will happen, so I blend developing the case with predicting the future part that is the key to Appeals Independence.

If I can make -- that's case-by-case and fact-by-fact determination.

A big picture way that Appeals can, you know, develop its brand and enhance its excellent brand for independence is engagement like this. I mean as a practitioner, the IRS is a big black box.

To taxpayers, the IRS is a big block box, and for better or worse, Appeals is inside that box.

So 90-plus percent of information that practitioners understand Appeals develops is inside the box, right? So the more that practitioners can reach out -- I beg your pardon, the more Appeals as an organization and Appeals Officers can reach out to AICPA, to the ABA tax section, TEI, other organizations to develop their thinking around positions or at the very least say hey, we are thinking about coordinating this issue.

If you have views on this issue, send them in. And God knows you will get a lot of noise, but you will get some pretty important signals as well.

>> KEVIN: Maybe I will flip this and give a couple examples of things that do not convey independence but up front are warning signs and put the taxpayer on defensive. One would be if someone from Chief Counsel is tasked by Appeals of sitting in and participating in the case, specifically when that person was involved in Exam.

I understand there's resource issues and there's a general view that that shouldn't happen, but in situations that I have experienced where the counsel who was on the exam is the counsel advising Appeals, that from day one kind of gives an impression that there's not the independence that a taxpayer might hope. I think the second broad area is to learn that a case has been either discussed with Exam somehow in violation of ex-parte or before having a conference that the Appeals Officer has already briefed the case up to the Appeals team manager or for some types of cases either in an attempt to coordinate or just to understand things knowing that, that before you even had the chance to come in and present your case beyond the protest that that's already gone up, that that really puts us on the defensive as well.

I think those are two situations where it's hard to walk in feeling like you're getting that truly independent look.

>> DARLENA: Thanks, and so on the point of counsel move to that and so counsel's involvement in our conferences does raise perceptions.

We understand that. Sometimes it appears we are not independent, so Reinhard, why don't you talk to us about how often we invite counsel to a conference and what their role actually is in advising Appeals.

>> REINHARD: Yeah, I would just say that counsel, I think for the most part my ATCLs would not invite counsel to the actual conference.

That does not mean they are not involved behind the scenes providing advice to us in order for us to independently determine the hazards.

I said that our administrative guidance, I think it is right, certainly in the IRM, but I think in the ex-parte revenue procedure talks about we are still required even with counsel advice to make our own independent determination.

That being said, there could be circumstances where counsel will be invited, perhaps there's a particular legal argument, or a factual discussion that probably was better suited that they would be present in order to properly advise us but typically that, it really occurs behind the scenes.

To address a couple of things Kevin brought up, I do think certainly with the counsel that's involved in Exam, I have not personally encountered that.

I'm not saying it has not happened but I'm saying my ATCL cases have counsel involvement to a far greater extent than the rest of the Appeals Exam function.

The interesting item that appears in the Taxpayer First Act 7803E is that unlike our prior administrative guidance where I think Appeals was oftentimes left in the awkward situation of having to police whether or not counsel was previously involved with Exam or, not that burden has shifted, or appears from the statutory language has shifted to counsel and I think the statute uses the term "to the extent practical." Probably less desirable, I'm sure perhaps the taxpayer representative community is probably a little more understanding that well, you could have the same attorney providing advice to both Exam and Appeals, but I'm quite sure many of your clients probably looked at that with a little more jaundiced eye and concern, quite sure. But, I mean, that's being said, I have had some discussions with counsel on that and has not been really elevated to me as an area of concern as yet although technically I would say under the statute it is okay.

And finally, I would just say again we do make, we do take great strides to make sure we do independently determine the hazards of litigation.

Oh, I remember the other part I wanted to bring up, I couldn't read my own handwriting when Kevin was speaking, but the ATM, ATM involvement, just so you know how I kind of proceed from my standpoint with the settlement authority, technically speaking, the ATCL has settlement authority but the manager has to approve it.

I would have final say, if there is a disagreement.

Now, in order to prevent the extremely awkward situation of having, let's say, an 80-page ACM submitted to the manager and the manager reviewing for the first time and now raising for the first time an area of disagreement, I fully expect my managers to be involved early in the process in order to make sure that that does not occur in the back end, which I think puts us in an awkward situation and certainly puts practitioners in an awkward situation and clients probably would be getting very upset over that, especially if there is an undue delay.

So, I do expect those differences to be vetted much earlier in the process.

Hopefully most practitioners are not aware that those differences have been resolved and that the issue get elevated to me early so at the end the settlement negotiations go as smooth as possible and when you have a final settlement in place it is in fact a final settlement because all the proper management authorities have been fully discussed and agreed with the final settlement. I wanted to mention that as well.

>> DARLENA: I do want to talk about the pilot test of inviting Compliance to attend our non-settlement portion of the conference in Appeals with the ATCLs. And the outcome of that pilot was determined that for the most part, you know, the ATCLs did feel like they were better informed about the case that included Compliance at the start of the conference, but some taxpayers are skeptical about this practice, right, and feel as though it weakens independence by including Compliance in the conference. I want to point this question to Reinhard and Kevin, and Kevin, you might start us off.

With the National Taxpayer Advocate and others, they suggested the ATCL invite Compliance only when taxpayers consent. What are your thoughts on that approach?

>> KEVIN: Yeah, so I have been involved in several conferences before, during and after the pilot program with varying degrees of Compliance involvement. I think there are two key aspects to this.

One is at what point do settlement discussions begin; and two, how does it, and most of my cases the ATCL manage that process? I completely agree that there are situations where beyond just one side going and the other side going and Compliance leaves, if Appeals has questions, has things they want to understand in order to properly evaluate the case, I think it's important and helpful for Compliance to stay during that. I think the goal should be to understand Compliance's position on both the facts and the law, but it's not an opportunity to engage in debate and settlement discussions.

And I think the difficulty is it can easily slip over into that depending on the personalities of Compliance or counsel involved at that stage.

I am not for a complete bar on it without the agreement of the taxpayer, but I think it is helpful to distinguish this from a fast-track Appeals and to have a point at which, once the positions both factually and legally are set forth that compliance does leave to give Appeals the ability to then independently engage in settlement discussions.

>> REINHARD: I think certainly on the ATCL cases where for the most part every case is represented oftentimes by several representatives, I think many of whom are fully versed with our Appeals process, understand the process. I think there's a much less of a concern.

Our survey itself, just to say, overwhelmingly I think exam and our own ATCLs I think are in full support of having exam at the conference when it is deemed helpful by the ATCL.

Practitioners somewhat surprisingly not as supportive, at least based on survey results, but I would suggest it was more positive that I had personally expected, so I don't think the sky was ended up falling as many practitioners had raised that some of these outreach events I spoke at.

Some of the things we did acknowledging some of these concerns, and Kevin alluded to it, and I don't think he said it directly, was this belief that we were forcing mediation.

We kind of clarified that, provided some documents, reiterated to our folks it's not intended to enforce mediation.

It still goes back to whether or not fast track is offered in Exam, whether or not both the taxpayer and Exam agree to fast track and/or wrap while the case is in Appeals jurisdiction and also outlined expectation call up front which feedback from practitioners as our own internal folks felt was very beneficial to get the parties together, explain the process. We even had one incident I know where after that initial expectation call, we had an agreed case before even having the conference with which I think turns out to be a win-win for everyone.

So, there is some benefits to that.

Clearly important part of the process is the setting forth ground rules -- who speaks first?

Do you actually have an open dialogue and just have people jump in whenever possible?

I suppose that could work in certain instances, but for the most part, you have to set forth ground rules.

I remember one case we had with a lot of participants; I think the ATCLs is part of the pilot actually had the parties direct the questions to them rather than each other just because of the sheer number that were in the room.

I think we are much more cognizant of that in the past, not that we didn't set forth ground rules earlier, but I think we have gotten a lot more cognizant of the importance of setting rules up front and clearly to both parties.

>> KEVIN: Darlena, I know we are running into the next segment, but since we touched on it, I wanted to touch on fast-track settlement.

I think it is a really unique process personally with a lot of the larger cases and taxpayers and I represent, we would use it almost every instance if offered.

I think the role of Appeals in that process of being a mediator and presenting the hazards to both sides obviously requires Exam and the taxpayer to come in willing to move off of the positions, or at least be open to hearing the feedback about it but that is a very efficient process.

I think the times the taxpayers are hesitant to use it is when Exam has been, you know, very, very, very strong in its position, and obviously this requires Exam to change a hat a little bit from the kinds of champion of a position to be open to listening to some views of the hazards but it a very different role for an Appeals Officer to take and it is very important to the system.

Again, we would use it in almost every instance because it is efficient, it keeps everyone in the room and lets you discuss the issues and lets you see the hazards of the case for everyone, so I want to make sure we got that in there.

>> DARLENA: Thank you for that. We were curious about to hear about the practitioner's point of view on fast track, and maybe later, if we have more time, maybe we can circle back to that and talk about maybe some of your ideas how we can encourage folks to participate in the fast-track settlement process, so thanks for that. Andy, I will turn it over to you for the next segment.

>> ANDY: Thank you for that Darlena. Enjoyed the conversation there about independence.

The next segment is we want to talk about Automated Underreporter and Correspondence Exam Cases.

The folks on the audience and call is well aware we have a large number of docketed cases that have come out of the IRS campus Automated Underreporter or Correspondence Exam Unit in a lot of cases taxpayers were unsuccessful in having a discussion with someone in IRS compliance in Automated Underreporter or in the COR exam unit so they received statutory notice of deficiency, petitioned the tax court, counsel gets the case and sends to Appeals and says the case hasn't been Appeals, would Appeals look at it and there has not been any engagement between the taxpayer and IRS compliance people it has just been notices that have been gone on, CP2000 notice and statutory notice of deficiency.

The first question is why? I'll turn to Jessica who has been managing this program for us.

Jessica, why have the taxpayer and the AUR COR exam unit not caught up here and resolved this case.

Why is it with tax court and why is it now with us?

>> JESSICA: Any time I do a briefing for Andy or Darlena, I say pre-COVID this is how things looked and this is how things looked during COVID. Pre-COVID we still did 60 to 70% of Exam Appeals work comes from campus sources, so when we look at those cases and do an examination, we do find that there are a good portion of taxpayers who are nonresponsive, for whatever reason, they have just been non-responsive.

The other big silo of that are taxpayers who simply ran out of time while they were working with campus compliance.

Between the 30-day letter and then the next movement of that case is usually the STAT notice.

It doesn't give taxpayers a lot of time to be able to provide information they need or clarify a position.

And then quite frankly, the smallest silo of these cases that we see docketed before the US tax court, there's actually a dispute.

Those are the only cases we really want. But we do have to recognize the fact that, you know, for, these reasons and campus compliance, because I have heard it referred to as a well-oiled machine, we do see a lot of taxpayers I think that were petitioning the court unnecessarily.

So, one of the things Andy and Darlena have tasked me with is we sit on a team with Underreporter and with Correspondence Exam and we have offered some suggestions on is there, you know, can you extend the time of that 30-day letter?

Give taxpayers some additional time to respond, especially during COVID.

I think the increase in petitions that we have seen as a result of COVID are directly related to the fact that those cases moved from that 30-day letter to that stat notice.

Can there be a follow-up letter before you issue that STAT notice to say we want to engage with you, we want you to talk to us?

The messaging that's in the STAT notice, that was another suggestion that we have had for Correspondence Exam in AUR is quite a few taxpayers we read them their petitions that they think once they get that STAT notice they can no longer work with Correspondence Exam or with AUR, so we think that messaging can be better and the taxpayer can continue to work with compliance.

It has been, you know, those are some of the things we put in front of them, negotiating with them and trying to come to some agreement that there is yes, you are a well-oiled machine but we have got a lot of taxpayers petitioning and paying filing fees that really don't need to. The volume of cases we see with stock sales where all the taxpayer needs to do is provide that Schedule D.

Those shouldn't end up in the tax court, you know.

Identity theft issues or, you know, amended 1099, amended W2, we want to resolve those at the earliest stage possible so we are going to continue to work with our partners in compliance and hopefully we can get some traction.

>> ANDY: You know Mary, as Jessica points out, we have been trying to work with Correspondence Exam in AUR to say is there a way fewer of these things petitioned the tax court if fewer of them have to come to Appeals.

So what is your experience with CP2000 notices from the campus. It is not taxpayers putting their head in the ground hoping it goes away, but I think there is correspondence that has crossed paths particularly during the pandemic and what do you see during those type cases.

>> MARY: I would agree what Jessica outlined though a lot of the reasons I think that there's taxpayer petitioner court, not that taxpayers want to petition the tax court or practitioners but a lot of times it is the timing aspect of it.

That limited 30-day time period where taxpayers get to gather the evidence and it takes more time because there is not just, it is not completely in the taxpayer's control. They are relying on third parties to get them records like schools, medical providers they need records from. So that's one of the things that limited 30-day time period and even if, I mean, sometimes in some cases, I mean, I know generally when I'm working these cases even though the letter may say 30 days it seems like I may get 60 days, but even with 60 days, it is difficult to get the evidence together to prove the case so that's a big issue.

You have always got the group of taxpayers who fear unfairness with Exams because they hear Exams and they know some family member that may have had a bad experience with being examined or audited, so there is that fear of unfairness. And a group of taxpayers that do, they put the notice in the kitchen drawer and don't respond, but the limited 30-day time period is, and the difficulty of taxpayers is getting evidence from third parties, is either especially during the pandemic but definitely before the pandemic that's a challenge.

What I mentioned earlier, just trying to figure out how to prove their case, well, maybe they may have evidence to prove their case is not in the narrow list on the Exams notice and know the Exam notice can't put together a list of every possible document a taxpayer can have, but that's where I think it goes back to if there is telephone conversations with Exams and the taxpayer that can kind of explain some of those things, maybe listen to the taxpayer situation and say okay, well, you know, based on what you said, this might be some evidence that would prove the taxpayer, the child lived with you, for example.

And one last thing I will say is I see a breakdown with taxpayers going straight, or not having much of a conversation with Exams when the taxpayer’s evidence is in the form of witness testimony and the taxpayer's own testimony. You know, even though there is an IRM provision that says exams can consider that I almost never see that happening. I see that happening with Appeals, but never directly with Exams so taxpayers are kind of forced to go straight to petition tax court when the evidence may primarily exist in witness testimony or the taxpayer's own testimony.

>> ANDY: I think that's interesting. Ann, I want to turn to you, and Jessica mentioned we are working with SBSE trying to maybe fix what can be fixed there but in the meantime, we have a 7500, 8000 cases that are docketed we are trying to work through, and we have been trying to call the taxpayer by telephone rather than send out a first letter and see if we could settle that on the phone call. Briefly how are we doing so far, Ann?

>> ANN: I will answer, but I wanted to make a comment briefly on something said before.

We do tell our AOs to set firm timelines, and I do hear that sometimes the taxpayers can't meet the 30 days, but sometimes taxpayers need firm deadlines because every minute we spend with one taxpayer is a minute we are not spending with others. We have to really triage these cases so I do want to say that everyone needs to follow timelines.

With our current method of calling people on the phone where we are able to reach them, we are able to set for them firm timelines and tell them this is what we need to hear from you and when we need to hear it.

We are finding some taxpayers we get ahold of and they absolutely are ready to engage, ready to have the conversation, and we are able to accept oral testimony and move those cases.

We have taxpayers with these messages, they do not return our calls and those may be the same taxpayers who didn't respond timely to their CP2000. So, I would say our current strategy of calling taxpayers and address a comment made earlier, taxpayers are pretty adept at figuring out who we are.

They will ask us for a docket number and who we know and we can establish who we are so we have had some very good success educating the taxpayers, getting taxpayers toward a resolution, understanding the facts that they have that support their discussion but it is not a system that's working for all taxpayers. And all of the 7500 cases.

>> ANDY: Let me stop and see, Shahid, are we seeing anything in the text chat about this issue that you would want to raise at this point?

>> SHAHID: Hi, Andy. Our folks are engaged. We are getting a lot of comments, you know, which are reflecting the conversation, but just got a comment about a question.

When there is a substantiation issue, it may be important to notify the taxpayer that you have 30 days to respond however, send what you can so we can consider the hazards and other things. So, the comment that’s related.

>> ANDY: That's a good observation. I was thinking and listening to Mary yeah if you are trying to get third party documents within 30 days and having a hard time doing it communication may be the key between IRS, exam and the taxpayer there.

Yeah. Jessica, any other observations before we leave this topic?

>> JESSICA: Not with this particular topic. I think the biggest challenge for the last six months and for the next six months will be working through that backlog of tax court cases.

The enhanced procedures that we have put in place this summer and we are going to be doing for the next 120 days is really to try to get a handle on that because we know, I think 20% of petitions that I reviewed showed that the taxpayer said I ran out of time, I just want to protect my rights to go to tax court.

This is an easily solvable issue. So that's why these enhanced procedures where we are picking up the phone and calling the taxpayer or we are sending out a quick letter saying this looks like this is what I need, send it back to me in 15 days, here is my eFax, my e-mail address, let's make this as easy on you as possible.

I'm hoping to work through some of these. It's rather than saying we are changing our procedures, what we are doing is actually trying to engage quicker and more taxpayers just so they don't have to go forward for trial.

I think that's the best customer service we can provide.

>> ANDY: I think that's right. And I would echo something here, Mary, that Ann I think said earlier is we appreciate the role of the clinics here in helping explain the law to taxpayers. I think as you know you first have to convince them that you're representing them, that you are sort of their advocate. We have an even a tougher battle when clinic is not involved in it so we appreciate the education that you bring and that hand holding for taxpayers who are not every day interacting with the tax system.

I'm going to stop there and turn it back to Darlena to spend the remainder of our time to the top of the hour focusing on our 4th segment today, which is really about conferences. Conference practices.

>> DARLENA: In our 4th segment, we are going to talk about the conferencing practices and some of the things that we hear from our taxpayers is they want to have the opportunity to talk to a human being and we just talked a little bit about that how that seems to speed up the process a little bit when we can actually connect with the taxpayer.

So going back to Jessica and Ann, other cases in Exam Appeals where we do interact with the taxpayers entirely by correspondence and in if so, do we think that can be a positive experience for the taxpayer?

>> JESSICA: I do, Darlena. You go back and look at customer satisfaction results and the survey results we get is a vast majority of people do want to correspond back and forth.

They still want that phone number, they still want that person that they can call but we do, especially and I think our pro se taxpayers, you know reps and Certified Public Accountants and they have no problem dialoguing, they like that face-to-face and the video conferencing.

Taxpayers, you know, I don't care how much we try to do outreach or talk to people, there is an intimidation factor so if they are more comfortable talking to us via correspondence, I'm all for it. I love the tools that we have with the eFax and some digital signatures. I think we are doing everything we can to try to engage and make the taxpayer comfortable. And Ann, I don't know if you feel similarly?

>> ANN: I would say that what contributes to a positive Taxpayer Experience is a resolution that they can understand.

Issues we see year after year. Sometimes we see a one-off issue the taxpayer has one time sold their house one time and that's an issue we will deal with once but for taxpayers who have an ongoing position any time we are able to communicate to the taxpayer that we understand the dispute we understand their position about the dispute and we can resolve it for them I think the taxpayers are satisfied and I think it is great we can meet them wherever they would like to be met.

If they want to just do this by correspondence, we can do it. I spend a lot of time convincing taxpayers that I can do this on the phone.

I believe I can do this as effectively on the phone as a video conference, and so we want to be nimble and available to engage with taxpayers however they wish to be engaged with. As long as they can understand the issue and they know we do.

>> JESSICA: To follow up with Ann, I think that's one thing I really want to press here is we have the reps who are competent, they know their job, and I do think we take a softer approach with pro se taxpayers and I think that's important. I think that educational empathy of that aspect just for, you know when you pick up the phone and talk to a taxpayer, the first thing I used to ask them as an Appeals Officer is tell me what's going on. I needed to know their story and I wanted them to know that they were heard and I think that's probably one of the best things we can do because we do have so many pro se taxpayers in Appeals that we didn't have, you know, 10, 15 years ago.

>> DARLENA: So, Mary and Tom, I will direct this to you. What do you think? What are your thoughts? Do taxpayers prefer to interact only by correspondence or do you think they are getting more comfortable with technology now, folks are, might be taking a picture of their document with their phone and are fine transmitting that to the service, you know, and to someone they may or may not, you know have had develop their relationship with in term of dealing with their tax situation. So, what are your thoughts?

Are they okay with that or do they want to do something different? More technology wise?

>> MARY: From my low-income taxpayer clients and their perspective, what I see is they are getting more adept and familiar with technology and they do like to take snapshots of documents and they send those to me all the time.

They are more comfortable providing that to the IRS. They are least comfortable my particular client based since they are low income taxpayers, they are least comfortable with the letters going back and forth just because they can't, a lot of times they have literacy issues, they can't comprehend what the letter is saying or what the letter is wanting so they get confused and it becomes overwhelming for them.

A lot of my taxpayers as well from low income perspective are transient and many are moving and they can't afford to pay rent and they are being evicted and moving from place to place, so when you are sending letters, it's hard for me with my clients -- and that's one of the biggest challenges my secretaries talk about is keeping up with my clients and they change the address and we tell them when we take the case in, let us know, because we can't effectively represent you if we don't know where you are at.

And no telephone number. But low-income clients, victims of domestic violence, facing evictions, they are transient, so it is hard to work with taxpayers, low income taxpayers because of the transiency issue.

English as a second language is another issue as well, and so if you don't know ahead of time that person's first language is Spanish and they have little comfort with the English language, I mean you are sending letters out it is not going to go anywhere so that's another concern.

From another concern common denominator with my low taxpayers is very inflexible work hours, and unlike me, they can't take leave and talk to me at certain times so I have to be available sometimes after work hours and that's a challenge. Another challenge I have is Appeals Officers sometimes are on the West Coast, so they are three hours apart from me and they will set a conference with me at 5:00 and it may not be until 8:00 my time or 4:00 and, you know, 7:00 my time, and taxpayers, I have seen a lot of taxpayers get confused. They miss conferences because of that when they were pro se before they came to me.

We had one case that recently went to the tax court and that was a collection due processing, wasn't exam case be it was remanded back because of confusion regarding the time even though the Appeals Officer listed it would be Pacific time, there was some real confusion there.

So I just think taking into account because it is easy when you have been in a professional environment a long time and I have to remind myself of this, that you don't hear from taxpayers and not responding that they don't care, they are not trying and I think -- I see this when I send cases also to our pro bono panel of private attorneys who agree to take these cases, they think of a taxpayer, write to a taxpayers and don't hear back and they don't care and don't want to proceed. But keep in mind, it may not be the taxpayer is being belligerent or refusing to try to work with Appeals or Exams.

It is that they are transient, English as a second language, literacy is an issue and inflexible work hours and then priority considerations. I mean I really, it's sometimes they are working just to survive and, I mean, there is -- even though the tax case is important to them, keeping their child out of jail or keeping their child in school is kind of more important issue.

So, just I always have to keep that in check with myself because especially we are offering free service as low-income tax clinic and why are people who contacted me not responding to me, so I have to be more flexible and I have to be a little bit more patient with them.

It is not that they don't want the help or not want to resolve their case.

>> DARLENA: All right, I see we are coming up on the top of the hour, so I'm going to move over to a question about our ATCL and our conferences. And we talked earlier about our ATCL cases and the conference attendance and sometimes how those can sometimes have large number of attendees.

So, Reinhard, what do we need to keep in mind -- and Kevin as well, what do we need to keep in mind with about conferences and what are some best practices about controlling these conferences?

>> REINHARD: I think if Kevin is okay, I will start off, and I did mention or allude to some of these things before that I think an up-front expectation call is extremely critical, setting forth ground rules, answering any questions that may come up. I mean, each case literally not only is it different because it has different issues, different taxpayers involved, different personnel but it is different often times procedurally in how it needs to be addressed.

Sometimes there is a greater interest, for example, from Exam and they sometimes send more of their folks to the meeting and I think the same side from practitioner’s side.

Sometimes let's say you have the representative on Appeals trying to settle.

Sometimes there are more practitioners there, and I oftentimes wonder if it is not their future litigators perhaps listening in and trying to plan litigation strategy, as well as exam perhaps and their counsel trying to think ahead a little bit of the case.

I think the larger the group gets, I think the more the greater importance it is to maintain control and set forth clear and easy to follow ground rules, who speaks, when they speak, who goes first, even something as simple as who prevents first, exam or the taxpayer if both parties are going to be present throughout the taxpayer conference.

>> KEVIN: I agree, Reinhard. I think from my perspective it may sound simplistic, but the pre-call to talk about how long is each side going to have to present and the ground rule of is compliance going to ask questions of the taxpayer during their presentation or afterwards can just help cut through a lot of things. I think one of the things that -- and also, the ATCL and specialists kind of asking questions which again, I think I encourage because the goal is to give the information that you guys need to evaluate the case.

I think one thing that is often sometimes unclear to the taxpayer side is who is the decision maker between the ATCL and the specialists?

And, you know, do the specialists wear the same hazards hat as the ATCL?

I think sometimes we see situations where the specialist, their job is to be the specialist in an area and it is very focused on the correct legal standard there, rightly so, and I think sometimes the balance between, you know, I have seen the ATCL wearing more of the hazards hat and having to pull back; and again, depending on personalities and strengths and the facts that comes into play, so I think that, understanding that dynamic and making sure that that is kind of clear and that we understand who the audience is is important.

>> TOM: If I could pitch in here just to amplify Kevin's points, and I love the past discussion with Jessica about the empathy and Mary and illustrating why empathy is so important.

Especially in large cases where we are in a world of campaigns that are coming up from Compliance, and as far as Compliance is concerned, they have found the solution to the problem and they are going to ship it off to Appeals and you guys are going to give a uniform answer across the board from their perspective.

I think Kevin's point is exactly right about technical specialist coming in on a case, especially on a campaign case. It is not incredibly helpful to have a technical specialist to say I have heard Compliance, I've heard Exam, I agree with them. Okay. Great. We talked with Exam about and couldn't resolve the case.

Infusing that question of hazards in everybody in the team, I mean, and maybe rolling it back to the fast-track point, if Appeals, all the entire Appeals organization can understand that things can always get worse.

It's kind of a bleak outlook. I'm an optimistic person, but the reason I encourage my clients to settle their cases is because things can always get worse, right? They sometimes can get better, but they can always get worse, and so let's resolve this case today. Maybe on imperfect facts, maybe on an imperfect record, maybe with guidance that's pending or forthcoming, but that's okay. We can take all of that into account and resolve the case, and even if it is a black and white issue, is this income, is it not, like that's a yes/no question. We can always hazard that and we can reach an agreement that's often times it's going to be better for everybody involved in terms of administering that agreement than if you just put the question to a judge, setting aside, again, the time, expense and waste of going through that process.

So, if I can hit one more point especially on these ATCL cases and campaign cases, I would encourage Appeals to push back on Exam either in the front end before the case comes, like here is our position, Appeals, you should just take it hook, line and sinker and Appeals does not do that, but I know Exam will pitch it pretty hard and especially on the back end after a case has been resolved on Appeals, Appeals has done its job by resolving job on hazards and if Exam has a problem with that, I mean, my, you know, my strong suggestion to Appeals is be proud of that settlement, be proud of what you have done under your mission and explain to Exam why you did it and maybe you can push back say next time, fast track will be a better answer for everybody.

And let's understand in Exam, your job also is to appreciate your position and your case has hazards, and it's my job to teach you, Exam, that that's the case.

So, that's my two cents on the large case conference practice.

>> DARLENA: So, it looks like we have five minutes. I'm going to stop. I got two questions that I'm really dying to ask, but let me throw to Shahid to see what we have in terms of questions and maybe we need to address those and maybe those questions might address the dire questions that I would love to ask.

>> SHAHID: Thanks Darlena, and I do want to say thanks to all our Appeals folks who are sending in comments and questions.

We are reading those. And we have tons of comments and questions as well, and one of them is what do our practitioners, what do they prefer are your clients, the taxpayers, the face-to-face or the video?

You know we have been during the pandemic been utilizing Zoom, we have utilized WebEx before.

That's one question. I'll just read quickly two more and maybe they will tie into, you know, your responses.

Should the taxpayer also come to the conferences, you know?

If you're representing a taxpayer and you're having a face-to-face or virtual conference, your thoughts about your client being present as well and how do you view that?

And what are you the practitioners looking for in an admin file when you request it?

>> KEVIN: I always prefer face-to-face. I think it is easier to have a discussion, especially in fast track when you are breaking out.

I know not all taxpayers have the ability to do that to get to our counsel for that, so I think there should be other options. I also think that the more familiarity with the virtual is helpful if a specialist needs not delaying things two months until a specialist can travel or budget issues or whatever.

But I do prefer to be in person.

On the taxpayer there, I think there are certain things -- well, first of all, they have a right to be there, and I think they sometimes like to be there, but for certain factual issues I think it is frankly much more credible coming from the taxpayer about how they keep things in the course the business and the earlier question about IDR is not being answered is because they are taking fast each other, we don't keep things in that way and can't produce substantiation the way you want and hearing from someone on the ground doing that can be very helpful, I think, in facilitating things.

>> MARY: I echo what Kevin said on face-to-face. It is much more productive.

I mentioned earlier we participate in virtual service delivery pilot project with Appeals and had face-to-face conferences years ago through something similar to Zoom, and I worked through a statewide project where most the time I don't get to see my clients face-to-face, so the cases that I have that are face-to-face when people can get to me, we get them resolved so much easier, so much quicker.

I can read body language and help interpret things and break down some communication barriers that it is hard to break down when you are talking over the phone, you can't see a person, so face-to-face I think is always going to have, in my experience, a much more I think productive conference and a better resolution for all involved.

Going to the client's presence, the question you asked about client presence, I don't often take my clients or ask my clients to come because they are intimidated by the IRS and they want me to handle it, and it is a comfort level to them. And also, they get confused on a lot of legal concepts and issues, and so they it is sometimes frustrating process when they attend because I do, if the client prefers to attend, I certainly do bring them, but they get confused over the legal issues a lot of the times.

But most the time the reason a lot of my clients don't attend when I ask for face-to-face is because they simply can't take off work or they can't get to me because I am a state-wide program.

I have 95 counties in Tennessee and a handful that people can drive to me, so don't participate if face-to-face or no technology.

And I am having difficulties today because I live in a rural area, and having good internet access is really a challenge.

And so I prefer face-to-face, but client's presence, I leave that up to the client.

Most clients prefer not to just because intimidation factor or inability to take off work when the conference is planned during work hours. The only time that I love Appeals, I love working with Appeals.

The only time I shut down with Appeals is when there is no priority with the docketed case versus non-docketed case.

And I have, I am coming on 60 days before trial and I have to have discovery done and reaching out to IRS counsel and discovery on what the position is they tell me they have to take the case away from Appeals to get the administrative file to take the case away from Appeals to do that, and I don't want that. And if there is a tax court rule with period of time for discovery to be completed before trial, and that's when I say to do that; but if there is some way Appeals can prioritize those docketed cases to make sure they are dealt with earlier rather than later, that is my request.

>> ANDY: I think it is a very reasonable request and it’s a good point and it’s what we are trying to do now given that volume of docketed cases and put them on as priority in longer term to work how we can work those in a reasonable position. I will say on the question of bringing the taxpayer, of course taxpayer has the right to hire a representative and have that representative appear on their behalf, so certainly we in Appeals should not be, and I don't believe we are twisting the arm of a representative to bring the taxpayer in if they want to have a representative represent them for the reason Mary points out, that's their right.

Also, I thought it was a good discussion on inviting Exam in the ATCL cases.

I want to remind our folks in Appeals that's the ATCL cases, we generally do not invite Exam to non-ATCL cases.

We work those on our own with the taxpayer, and there is generally not a reason for Exam to be there, so that conversation really was just focused on the ATCL cases.

I have to say Mary, Tom, Kevin, you know, we could have gone another 90 minutes here I believe, and I appreciate the three of you joining us today and bringing perspective. I always appreciate Reinhard, Jessica and Ann sharing what's going on in Exam Appeals. I thought this was a great panel and I know we have run over on time, but it was well worth it.

And thank you all for joining us today and for your insights and, you know, a ton of good questions, as Shahid said, coming in on the text chat. It would be great to get to all of them.

We can't, but we hope our Appeals audience members enjoyed it. And thank you to the panel joining us today.

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