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Tax Executive, The

Neither rain, fire, nor whirlwind of legislation will keep TEI from its appointed rounds

Neither rain, fire, nor whirlwind of legislation will keep TEI from its appointed rounds

Raymond G. Rossi

The last two months have reminded all of us that, despite best-laid plans and our earnest hopes for well-ordered lives, we often find ourselves at the mercy of events outside our control. The beginning of TEI’s year was anything but auspicious; as members of the Institute’s Board of Directors and committee chairs were heading home from the annual meeting of members in Alberta, major portions of the northeastern United States and Ontario were thrown into darkness when the electrical grid failed. Many of us attending the Banff meeting also found ourselves affected by forest fires in western Canada, though the inconvenience we experienced was nothing compared to that suffered by those whose livelihoods or homes were affected by the flames, soot, and ash.

A little more than a month later, Mother Nature manifested herself in the form of Hurricane Isabel, wreaking havoc on the eastern seaboard and effectively shutting down Washington and many other cities for several days. Some members of TEI’s staff found themselves with out power for up to five days. I am pleased to report, however, that members of’ the staff made their way into the office even as the federal government battened down the hatches and closed for two days.

The Whirlwind of Legislation

The last challenge deserving mention is the man-made whirlwind of tax legislation (and proposed legislation) that has moved to center stage, not only in Washington, but also in the States. Unlike the power grid’s failure, however, or the fallen trees and other hurricane-related damage, the “end” is not in sight for the legislative whirlwind that often characterizes the centers of government. Indeed, as TEI approaches its 58th Annual Conference, quite the opposite is true. In Washington, pressure from the European Union for immediate replacement of the FSC/ETI export incentive has spawned numerous competing proposals. Some of these proposals address long-needed reform of the Code’s international provisions. Others promise tax reductions in respect of manufacturing income and repatriated earnings. And still others combine positive changes with proposed revenue offsets that would, in tandem, produce winners and losers across the business community, as well as engender more than a modicum of confusion and uncertainty.

Similarly, the question of tax shelters continues to command congressional attention, with the Senate Finance Committee having already approved legislation to increase penalties and require CEOs to sign corporate tax returns. Moreover, the Finance Committee seems poised to do even more, for it will soon hold a hearing–featuring at least one anonymous witness–provocatively titled “Tax Shelters: Who’s Buying, Who’s Selling, and What’s the Government Doing About It?.” At this writing (the middle of October), it is far too early to predict whether and how the various and sundry issues will be resolved, but the implications for corporate taxpayers are tremendous. For example, the outgoing Governor of California has already signed legislation (borrowed from, but not yet enacted by, Congress) to increase tax shelter penalties. (Fortunately, in response to comments by TEI and others, the State did not engraft a far-reaching economic substance test on California’s tax law.) Equally significant, the attention focused by Congress cannot help but have an effect on the Internal Revenue Service and its counterparts in the states. In other words, even in the absence of additional legislation, taxpayers and tax executives will be dealing with consequences of this congressional scrutiny for the indefinite future.

Report from the Working Groups

It is amidst this maelstrom of legislative activity (and its intended and unintended consequences) that TEI will hold its 2003 Annual Conference in Atlanta. We have sessions planned on all the topics referred to above, plus timely sessions on corporate governance, tax accrual workpapers, employee benefits, and developments in the states. Highlights of the conference will be summarized in the next issue of the magazine, so suffice it to say here that TEI members will have much to talk about in Atlanta. This is true not only in respect of technical tax issues, but also how TEI should respond to them … and, indeed, the other challenges facing our profession. For example, we will put the finishing touches on a guide addressing how members can become more involved in the Institute’s advocacy efforts. The guide to “how members can make their issues TEI’s issues” is the first product of one of the Institute’s three working groups, which were described in my last column. I am hopeful that the guide, which will be distributed to members later this year, will live up to the working group’s name by empowering members to better serve their companies and their profession.

The other two working groups have also made strides. Specifically, the Working Group on Enhancing Member Value has teamed with the Advanced Technology Committee and staff to significantly advance TEI’s goal of creating a new website with enhanced content and functionality. By the end of October, TEI will select the vendor that we will work with to build the new system, and by the time our Midyear Conference convenes next March, the new site–with subsidiary sites for our chapters–will be operational.

This group has similarly worked with the Corporate Tax Management Committee on a proposed survey of corporate tax departments that will provide TEI members with helpful benchmarking information on department structure, size, and budget. The timing of the survey will be announced in a future issue of The Tax Executive.

The third working group, focused on engaging members, has also made good progress. For example, under the group’s aegis, TEI is actively exploring the creation of an Asia Chapter, which will likely be located in Singapore or Hong Kong. Drawing upon the successful experience of the Institute’s European Chapter, the group will hold an exploratory meeting in Vietnam in November (as part of a conference sponsored by Baker & McKenzie). The Engaging Members Group has also developed the program for a Senior Tax Executive Conference, which will be held in Scottsdale next May. Finally, the group is overseeing efforts by our Membership Committee to identify ways in which TEI can aid its members in transition and enhance the diversity and pool of business tax professionals.

Technical Activities: Your Help Needed

All these words about the efforts of TEI’s three internally-focused working groups should not mask the outstanding work done by our technical committees. Since August, TEI has testified before the Canadian House of Commons, filed comments with the California legislature and the Virginia Department of Revenue, and urged the Treasury Department to significantly modify its tax shelter regulations. As previously noted, we have also reiterated our opposition to the codification of the economic substance doctrine. The Institute’s technical submissions are reprinted in this issue and are posted on TEI’s website.

More work remains to be done, however, and I urge you to lend your assistance to our efforts to improve tax policy and administration in the United States, Canada, and Europe. For example, our Canadian committees are currently at work on the agendas for TEI’s December liaison meetings with the Department of Finance, Canada Customs and Revenue Agency, and Department of Justice, and we need suggestions on specific items to be included. We also welcome your suggestions of projects to be included in the Treasury/ IRS’s business plan. Contributing is as easy as calling 202.638.5601 and asking for a member of the legal staff or sending an e-mail message to advocacy@tei.org. Alternatively, do not hesitate to send your comments directly to me at ray.g.rossi@intel.com. By working together, we can enhance the organization’s effectiveness.

With Appreciation

I want to take this opportunity to thank the firms that have become sponsors of the Institute’s 58th Annual Conference. Their support has enabled TEI to advance its education, networking, and advocacy goals.

Platinum: Baker & McKenzie, Deloitte & Touche LLP, Ernst &Young LLP, KPMG LLP, Mayer, Brown, Rowe &Maw LLP, McKee Nelson LLP, PricewaterhouseCoopers LLP, RIA

Gold: ADP Tax Credit Services, DuCharme McMillen & Associates, Inc., Smith Thimm & Associates, Sutherland Asbill & Brennan LLP

Silver: Alston &Bird LLP, Baker & Hostetler LLP, Fenwick & West LLP, King & Spalding, Miller & Chevalier Chartered, Shaw Pittman LLP, Thompson Hine LLP

Bronze: CBIZ Valuation Group, Inc., Duane Morris LLP, Grant Thornton LLP, Management Insights, McDermott, Will & Emery, TaxSearch, Inc., Wachovia Exchange Services, Inc.

COPYRIGHT 2003 Tax Executives Institute, Inc.

COPYRIGHT 2004 Gale Group