2011 ANNUAL WASHINGTON DELEGATION
May 1-3, 2011

By David Roth¹

Members of the 2011 Washington Delegation, comprised of 24 members in total from the Taxation Sections of the State Bar of California ("State Bar") and Los Angeles County Bar Association ("LACBA") (together, the "Tax Sections"), have recently returned to California after another very successful annual trip to Washington, D. C. (the "Delegation"). The Delegation took place from Sunday, May 1, 2011 through Tuesday, May 3, 2011.

This article briefly: (i) summarizes the background and purpose of the Delegation; (ii) lists the 9 papers presented during this year’s Delegation; (iii) identifies the schedule of events and governmental offices visited during the Delegation, (iv) thanks those individuals from the Tax Sections who made this Delegation possible; and (v) provides information on how to get involved with next year’s 2011 Washington Delegation.

History and Purpose of the Washington Delegation Trip. Since 1989, the Tax Sections, working together, have sent an annual delegation to Washington, D.C. to present papers on issues of concern to California tax practitioners.

Historically, and most recently, during the first week of May, the Delegation meets with a number of United States Tax Court judges and key governmental officials from the Internal Revenue Service Office of Chief Counsel, the Taxpayer Advocate’s Office, the Treasury Department, the House Ways and Means Committee’s tax staff, the Senate Finance Committee’s tax staff, and the Joint Committee on Taxation’s tax staff.

The Delegation serves a variety of functions. The most important is to make a substantive contribution to the tax laws. A number of proposals made during past Delegations, substantively and procedurally, have been adopted in one form or another in the tax law or regulations.

The Delegation also familiarizes government officials with the existence, experience, and concerns of California tax lawyers. Delegations have increased the awareness of government tax officials and have enhanced the Tax Section’s ability to play a part in tax policy. Through the Delegation, the Tax Sections strive to encourage tax officials in Washington D.C. to consider the California Bar (i.e., the Tax Sections) as an available resource.

The Delegation also benefits the individual Delegation members. The Delegation provides an extremely valuable insight into how the government functions and the issues that concern those who formulate the tax laws and regulations. It also provides the respective Delegation members an opportunity to develop relationships with government staffers who work in areas of practice.

Lastly, paper is published national and state-wide tax journals like the California Tax Lawyer, as well as online, Tax Notes Today

2011 Washington Delegation Papers and Presenters. Beginning in October 2010, the Tax Sections began their task of finding paper topics and presenters. This work resulted in the following 9 papers being presented during the 2011 Washington Delegation:

1. Title: The Administrative Law Implications of Mayo Foundation for Medical Education and Research v. United States– By: Robert Horwitz and Courtney Anne Hopley. (Discusses the potential implications of the Supreme Court’s decision giving greater deference to IRS regulations.)

2. Title: Proposed Changes to Internal Revenue Code Section 2519 – By: Robin L. Klomparens and Mary K. deLeo. (Seeks a more appropriate manner of applying the provisions of IRC section 2519 to partial transfers of QTIP interests, intentional or inadvertent, rather than the current confiscatory required application.)

3. Title: The Specter of "Clawback" After the Tax Really, On the limited Insurance Reauthorization in Job Creation Act of 2011 – By: Dennis I. Leonard and John W. Prokey. (Seeks clarification as to whether there is to be, or should not be, a “clawback” of the $5,000,000 unified gift tax exemption if, as presently scheduled, the provisions of the 2010 Tax Act sunset at the end of 2012.)

4. Title: Expediting Recognition of Exempt Status and Increasing Form 990 Clients Section 501 (C) (4) Single-Cycle Ballot Measure Organizations – By: Nancy E. McGlamery and Eric K. Gorovitz. (Proposes ways to facilitate Form 990 compliance for short-lived non-profit organizations involved in political activity with respect to state initiatives.)

5. Title: Clarifying Rule for Classification of New Foreign Business Entities Treas. Reg. Section 301.7701-3: Case Study: The Mexican Sociedades Anonomas Promotoras de Inversions (SAPIs”) – By: Liliana Menzie and Patrick W. Martin. (Requests clarification and suggests that investors in foreign entities newly created by foreign governments be allowed to elect the character of the entity under the “check the box” provisions, unless the entity has previously been identified as a “per se” corporation under Treasury Regulation section 301.7701-3.)

6. Title: Proposed Guidance Under: Section 108(d)(3) – By: Haleh Naimi. (Seeks clarification and guidance for the treatment of cancellation of indebtedness income with respect to contingent liabilities in non-bankruptcy proceedings under IRC section 108(d)(3).)

7. Title: Proposed Guidance Under Treasury Regulation Section 1.509(a) – By: Mark E. Powell and Andrea Kushner Ross. (Guidance was requested as to how a charitable trust may qualify as a “supporting” organization.)

8. Title: A Proposal to Reduce Compliance Costs for Self-Employed Taxpayers by Adding a Standard Deduction For Ordinary and Necessary Business Expenses to Section 162 and Form 1040 Schedule C-EZ – By: Charles J. Taylor. (Suggests the enactment of legislation creating a standard deduction for low income taxpayers for business expenses.)

9. Title: Lack of Statutory Levy Restrictions on Retirement Accounts: Why Fix It? Because It’s Broke – By: Joseph P. Wilson. (Recommends that restrictions be imposed on the ability of the IRS to levy on retirement benefits, similar to those available with respect to levies on wages for employed individuals.)

Schedule of Events During the 2011 Washington Delegation.

The following is a short summary of the Delegation’s itinerary this year:

Sunday, May 1, 2011. The Planning Committee of the Delegation met Sunday afternoon to finalize certain aspects of the presentations that were to begin on Monday. Later, the entire Delegation (including some guests) met for a “rehearsal dinner” at Morton’s Steakhouse on Sunday night to discuss certain protocols to be followed as well as last minute preparations and scheduling. Also each of the presenters provided a brief summary of their respective paper to the entire Delegation.

Monday, May 2, 2011. Monday morning the Delegation went to the IRS Office of Chief Counsel. Here, each of the papers was presented to various attorneys at the IRS Office of Chief Counsel who practice in the subject area of the particular paper topic. Certain papers were also heard by Nina Olson, the National Taxpayer Advocate (who had specifically identified several papers she wanted to discuss) along with her staff.

After meeting at the IRS, members of the Delegation had lunch at the famous Old Ebbitt Grill.

The afternoon session was at the Treasury Department where the papers and presenters were divided into two groups, with the presentations being made to Treasury staff members with specialized knowledge of the particular topic(s) being presented.

The intense and very stimulating day was capped off with a cocktail reception at the historical Dolley Madison House (a short walk from the White House) hosted by the Delegation. A number of the key governmental officials and judges attended, including several of the Tax Court judges.

Tuesday, May 3, 2011. The entire Delegation met with the tax staff from the House Ways and Means Committee from 9:00 a.m. to 10:00 a.m. to present the papers that had been specified by the staffers. Following this meeting the Delegation divided into two groups. One group went to the Joint Committee of Taxation for presentation of papers. The other group went to the Tax Court where it met with certain Tax Court judges at the very table at which those judges discuss the Tax Court cases they hear. This session was also attended by certain upper level management members of the Office of Chief Counsel. In accordance with the prior request of the Tax Court judges, no papers were presented. Rather, in accordance with the Tax Court judges’ request, a roundtable discussion was held with respect to practitioners’ comments and issues having to do with the processing of cases. Members of the Tax Court and of Chief Counsel’s Office participated in this process all of which was designed to find ways to improve the experience of all concerned. After the conference, the Delegation (including those that had been at the Joint Committee on Taxation) had lunch with the Tax Court judges and members of Chief Counsel’s Office in the Tax Court judges’ private dining room. This was a very convivial experience.

Tuesday afternoon, the entire Delegation headed back up to “the Hill,” where it presented the papers to the Senate Finance Committee tax staff.

Thank You to the Members of the 2011 Washington Delegation.

The success of the 2011 Washington Delegation was due, in large part, to the outstanding contributions of the authors and presenters of the papers. Also essential to the success of this year’s Delegation were the efforts of the committee chairs of the respective Taxation Sections, and the 2011 Washington Delegation Planning Committees of both the LACBA and the State Bar. The 2011 Washington Delegation Planning Committee includes, in no particular order, Thomas Giordano-Lascari (Member, LACBA Executive Committee), Tom Levy (Chair, LACBA Tax Section), Carley A. Roberts (Chair, State Bar Executive Committee), Douglas L. Youmans (Chair-Elect, State Bar Executive Committee), G. Michelle Ferreira (Immediate Past Chair, State Bar Executive Committee), Geoffrey Weg (Member, State Bar Executive Committee), LaVonne D. Lawson (Member, State Bar Executive Committee), Julie Treppa (Member, State Bar Executive Committee), and David Roth (Member, State Bar Executive Committee). A special thank you goes to Marcy Jo Mandel, Deputy State Controller, Office of State Controller John Chiang, for her continued support, participation, and guidance as a member of the Delegation. The author also wishes to personally thank, Eric Swenson, who headed the 2010 Delegation, for his counsel and suggestions which helped to make the 2011 Delegation a success.

Next Year’s 2012 Washington Delegation.

Next year’s Delegation is tentatively planned for May 6-8, 2012. If you are interested in drafting and presenting a paper, or you have any suggested paper topics, please contact David Roth at David Roth, A Professional Corporation, 9595 Wilshire Boulevard, Suite 900, Beverly Hills, CA 90212; Telephone: 310-571-8125 or at 16daroth@gmail.com.

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