Senators from both sides of the aisle and the Treasury Inspector General for Tax Administration questioned the plan by the Internal Revenue Service to cut back its walk-in and telephone Taxpayer Assistance Centers during a hearing on the 2006 IRS budget. IRS Commissioner Mark Everson discussed the agency's plan to close as many as 105 TACs and cut back its toll-free telephone service by 15 hours a week at the Senate Appropriations Subcommittee hearing. TACs are located nationwide and allow taxpayers to have face-to-face meetings with IRS employees who can assist taxpayers with tax law, tax return preparation and account inquiry resolution. "The IRS needs to balance customer service with its compliance and enforcement efforts," said Sen. Christopher Bond, R-Mo., chairman of the Transportation, Treasury and Housing and Urban Development Subcommittee. "I believe that most people who fail to comply with the tax code do so unintentionally because of its difficulty and complexity. Accurate and timely guidance from the service is imperative to ensuring taxpayer compliance." Colleen M. Kelley, president of the National Treasury Employees Union, warned that closing Taxpayer Assistance Centers will result in reduced taxpayer education and compliance at a time when the gap between taxes owed and amounts paid has increased to upwards of $298 billion.

The government is upping its enforcement measures in the wake of its success in catching tax cheats, penalizing promoters, barring unscrupulous preparers and shutting down abusive tax shelters, according to officials. At a joint Internal Revenue Service-Justice Department briefing, agency executives noted that last year, IRS Criminal Investigation referred more than 3,000 cases to the Justice Department for possible criminal prosecution, nearly a 20 percent increase over the previous year. During fiscal year 2004, the conviction rate on cases investigated by the IRS and referred to Justice was 95.4 percent. "If you're thinking about cheating on your taxes, think twice," said IRS Commissioner Mark W. Everson. "The IRS is ramping up its enforcement efforts, particularly for high-income individuals and corporations. Where we need to, we turn to the Justice Department to take people to court." The Justice Department's Tax Division's criminal enforcement priorities include prosecuting schemes that involve using trusts or other entities to conceal control over income and assets; shifting assets and income to hidden offshore accounts; claiming fictitious deductions; using frivolous justifications for not filing truthful tax returns; failing to withhold, report and pay payroll and income taxes; failing to report income; and failing to file tax returns.

Former Senators Connie Mack and John Breaux, chairman and vice-chairman of the President's Advisory Panel on Federal Tax Reform, are inviting interested parties to submit ideas for reforming the tax code. "At our six public meetings that were held all over the country, we learned about the complexities of the tax code and its impact on taxpayers," said Mack. "This request for ideas to reform the tax code marks a shift of our focus from defining the problems in the current code to considering options for reform. We will be reviewing specific proposals for reform that have been offered in the past as well as new ideas that are submitted. We expect to hold more public meetings in the coming months to discuss these options and alternatives." "It is important that we hear from Americans about the kind of tax system they want," added Breaux. "We look forward to receiving comments from all interested parties." This is the panel's second specific request for comments. In connection with its first request, the panel received thousands of comments describing complexities and burdens, unfair aspects, and distortions in the current tax system. Information on how to submit comments, as well as details on the format for comments, are available at www.taxreformpanel.gov/contact/ .Comments submitted in connection with this second request should be received by the panel no later than April 29, 2005. All comments submitted will be made available to the public.

The Justice Department has asked a federal court to bar Ella Mae Peterson, a St. Louis preparer for H&R Block, from preparing income tax returns for others. Peterson worked for 20 years at the St. Louis office. For tax years 2000 through 2003, she prepared 1,751 returns for Block customers. Internal Revenue Service audits of 31 of those returns revealed improper deductions on each return. The deductions included fictitious or inflated charitable contributions, business and medical expenses, and state and local taxes paid. The complaint estimates that returns Peterson prepared for the tax years from 2000 to 2003 have cost the Federal Treasury more than $6.5 million. "People who prepare false or fraudulent tax returns cheat their customers and unfairly shift the tax burden to honest American taxpayers," said Eileen J. O'Connor, assistant attorney general for the Justice Department's Tax Division. "If you have your tax return prepared, review it carefully, and make sure that what you file with the Internal Revenue Service is accurate." Block spokesperson Nancy Wagoner stated: "Our training, monitoring and supervision of tax professionals is unquestionably the best in the industry. Should an incident such as this occur, we do our best to learn from the situation and communicate the appropriate messages to both our clients and our tax professionals." "H&R Block's policy is to cooperate fully with authorities on any investigation, and we have done so in this case," she continued. "We do not, however, comment on employee matters."

The Internal Revenue Service is accepting applications for joining its Taxpayer Advocacy Panel. The TAP provides a forum for citizens from each state to make suggestions regarding IRS decision-making, and works to identify and prioritize taxpayer issues. "We are committed to working with taxpayers to improve the customer-service focus of the IRS," said Nina Olson, IRS National Taxpayer Advocate, in a statement. "Working with taxpayers directly helps us identify issues that may not be on the IRS radar screen. We can also hear their concerns about issues the IRS is already addressing." TAP applicants must be U.S. citizens and be able to commit 300 to 500 hours during the year to the panel. In addition, they must be current with their tax obligations and pass a criminal background check. The application is available at www.improveirs.org, or by calling (888) 912-1227. Applications must be received by the TAP office by April 29.

The 2005 filing season is heading into the homestretch with growth in nearly every category of filing, according to the latest interim figures released by the Internal Revenue Service.

In recent testimony before the President's Advisory Panel on Federal Tax Reform, Federal Reserve Chairman Alan Greenspan floated the idea of a consumption tax to replace all or part of the current income tax.