5.1 Office of Tax Policy at the Department of the Treasury
The Office of Tax Policy (OTP) operates under the leadership of the Assistant Secretary of Tax Policy, a political appointee. This is the highest-ranking office in the administration devoted to tax. Under the Assistant Secretary, there are various deputies and special counsel, as well as the Tax Legislative Counsel, International Tax Counsel, and Benefits Tax Counsel. The last three manage a staff of approximately 25, each of which is an expert in her or his field. The OTP staff is fairly accessible, and often answer telephone questions from knowledgeable callers. This can be done anonymously. Any answer obtained from OTP can be regarded as representing current thinking by the Treasury, but in no way binds the government.
The OTP Counsel and Assistant Secretaries may also be available for meetings if a taxpayer has some pressing, novel, or politically important issue. For example, if a company were issuing a new type of hybrid debt instruments, it may behove the company’s tax department to approach the Treasury to get its views on the instrument. However, even when made at the higher levels, verbal comments do not bind the government. They may provide comfort or caution a taxpayer or may raise novel technical issues. However, they do not guide the IRS field agents or the controversy process.
For taxpayers facing IRS agents with ongoing technical misunderstanding, OTP is an excellent resource to appeal to for a change in guidance — in the form of regulations, or published ruling, for example. The Treasury and IRS publish a business plan which generally describes the ambit of projects being worked on. They may, however, open a new project if there are compelling reasons to do so, for example, an IRS field development that OTP believes is out of line with appropriate tax policy. Appeals to Treasury for this purpose are usually sent in the form of a letter to the appropriate staff person and can be followed with a request for a meeting. Sometimes a letter to Treasury may be combined with letters sent simultaneously to the IRS and to appropriate Congressional committees.
Treasury is not permitted to become involved in an individual taxpayers matter unless it has some particularly important implication for policy. Treasury cannot interfere in an audit controversy, so any assistance a taxpayer seeks from OTP must involve some higher-level policy issue or be of a proactive nature.
5.2 IRS Chief Counsel
The large staff at Chief Counsel works as technical advisors to the IRS field officers and as liaisons with Treasury. Chief Counsel is responsible for taxpayers-specific guidance (e.g. private letter rulings and TAMs), as well as published guidance (e.g. regulations, revenues rulings, revenue procedures, and general advice memoranda). The published guidance agenda is driven by the Business Plan, released jointly by the IRS and Treasury. In deciding which items to put onto this agenda, the IRS and Treasury consider requests and suggestions from the public. The guidance plan is an opportunity for a taxpayer to encourage the IRS and Treasury to consider issues which the taxpayer believes the field officers are approaching incorrectly. Many controversies precipitate changes in the law, and taxpayers should consider themselves as agents in this process rather than as passive participants. Those taxpayers which make an effort in getting to know the relevant staff at Chief Counsel often find it easier to resolve conflicts in other areas of the IRS as they arise.
5.3 Congressional committees and groups
Congress has various groups dealing with tax matters, and all are responsive, to some degree, to taxpayer comments and complaints. They are effective in making changes to the Internal Revenue Code, as well as correcting errors to the existing Code. Three primary bodies consider tax law their jurisdiction, namely the Joint Committee on Taxation, the Senate Finance Committee, and the House Ways and Means Committee.