As we dive into June, I want to express my gratitude to our former president Sonia Vital for her outstanding contributions to our chapter. During her presidency, we enjoyed numerous engaging events and opportunities for involvement. She not only promoted participation but also fostered a new partnership with the Professional Financial Planners Association. Thank you!

In May, I had the privilege of coordinating the annual state Committee on Taxation for CalCPA/IRS Liaison meeting for the first time. The IRS’s shift towards a more open and collaborative approach was evident in the excellent group of IRS speakers we had. We were fortunate to have senior managers and directors from various departments such as Criminal Investigations, IRS Counsel, Large Business & International and Stakeholder Liaison departments.

For those involved in tax matters, you are likely aware that partnership audits have been on the decline despite the rise in partnership tax returns filed annually. Dealing with an audit related to ownership of a passthrough interest often exposes the IRS's limited knowledge and understanding of the partnership tax regime. This lack of expertise not only prolongs the audit process but also requires CPAs or tax attorneys to educate auditors on the intricacies of passthrough entities and ownership interests. With funding from the Inflation Reduction Act, a new passthrough department under LB&I for trusts, partnerships, and S corporations of all sizes is being established. The objective is to enhance audit coverage and offer a higher level of expertise to handle audit cases more effectively. This new division is expected to be operational by the end of this year.

If you haven't had the opportunity to work with an IRS Stakeholder Liaison before, I encourage you to connect with your local liaison. They play a crucial role in maintaining open lines of communication between stakeholders (CPAs) and the IRS. Through the Issue Management Resolution System (IMRS), they escalate issues and feedback to the relevant departments, ensuring a smoother communication process.

For a more comprehensive overview of the COT CalCPA/IRS Liaison meeting, please see the COT article in the August issue of CalCPA Magazine.