Please note: this exact letter was also sent to Senators Grassley and Baucus, as well as to Congressmen Bill Thomas (R-CA), Charlie Rangel (D-NY), and John Lewis (D-GA).

September 29, 2005

Chairman Jim Ramstad
House Ways and Means Committee
Subcommittee on Oversight
1102 Longworth House Office Building
Washington, District of Columbia 20515

Dear Chairman Ramstad,

As President of the National Association of Enrolled Agents (NAEA), I am writing on behalf of 40,000 enrolled agents (tax practitioners licensed by Internal Revenue Service (IRS)) to voice our strong objection to a revenue offset amendment recently appearing during the debate on the Safe, Accountable, Flexible, and Efficient Transportation Equity Act of 2005.  This amendment would have been to the detriment of taxpayers.  While Congress eventually dropped the provision from the legislation, it has come to our attention that it is once more being considered for the inclusion in either the budget reconciliation bill or as part of legislation to pay for hurricane relief, each of which is likely to be acted on in the near future.

NAEA asks that before moving forward with this proposal–or any variation of it—your Committee consider holding a hearing to discuss thoroughly the implications of such a dramatic change to current law and to consider alternatives less harsh on taxpayers who clearly need the relief and a fresh start provided by the offer program.

If enacted, the proposal would require a taxpayer either to remit 20 percent down payment with any lump sum offer or make regular payments of proposed OIC installment payments while IRS considers the offer.  Should IRS reject any offer, the agency would retain any monies remitted under this requirement.  While the proposal would repeal the $150 OIC user fee, reduce time IRS has to accept an offer from 24 to 12 months (starting in 2010), and create a task force to review the entire OIC program, enrolled agents believe these benefits would far outweighed by the so-called “good faith” provisions of the program.

We believe strongly that the steep entry cost would likely prevent legitimate offers from being made.  With IRS guaranteed monthly “good faith” payments, the provision may also actually have the affect of slowing, rather than speeding, IRS’ OIC processing.  Given the experiences of our members in writing offers, we can assure you that it will also have the perverse effect of discouraging taxpayers from seeking loans from family members in order to pursue legitimate offers.  As a matter of fact, we are quite skeptical that the provision will raise nearly the revenue projected, or in fact any revenue at all.

In short, while NAEA has always supported making improvements to the OIC program, including those that discourage frivolous filings, we believe the Committee should make a careful review of the program and consider alternatives to this proposal more in spirit of the Restructuring and Reform Act of 1998.

Thank you for your consideration.  We look forward to working with you and your staff to develop a balanced approach to reforming the OIC program.

Sincerely,

Francis X. Degen, EA, TCP
President
National Association of Enrolled Agents