This month, accounting undergraduates at the University of Maryland’s Robert H. Smith School of Business took 10 days to visit 15 accounting destinations in Washington, D.C., as part of Jim McKinney's "Tax Avoidance, Tax Policy, and Tax Research Techniques" course. Students met with individuals, groups, and organizations that create, influence, interact, enforce, and adjudicate U.S. tax policy. Read about their visits and see what it’s like to be an accounting student at UMD-Smith in 2015.
1. Government Accountability Office (GAO) on Jan. 6, 2015
Overview from Prof. McKinney: The U.S. Government Accountability Office (GAO) is an independent, nonpartisan agency that works for Congress. Often called the "congressional watchdog," GAO investigates how the federal government spends taxpayer dollars. The GAO has performed a series of audits on U.S. tax programs and policies and issued reports to Congress and the public. Students met with James White, Director of Tax Issues for the GAO. He went over highlights of several recent and significant GAO reports highlighting abuses of the federal tax system as well as other reports providing important information for policy makers within Congress.
Alison O’Donnell: “It is very comforting for me, as a citizen, to know that there is a system of surveillance to combat the intimidating size and power of the government. I think it was great that the GAO presentation was our first presentation because of the non-partisan aspect of the organization.”
Stephanie Mende Rodrigues: “I thought our speaker, Jim White, the director of Tax Issues at GAO, was personable, professional, and willing to speak openly about important tax avoidance issues in our country.”
Venessa Sorto: “The presentation by Mr. White was very useful and helped me understand a lot of the complex tax issues that exist, such as inversions.”
2. EY National Tax Department on Jan. 7, 2015
Overview from Prof. McKinney: EY National Tax Department advises practice offices of the firm regarding tax policy and acts as consultants to those offices and their clients. EY is one of the Big Four accounting firms. Students met with Dan Mullins, EY National Director, State and Local Tax Policy.
Alison O'Donnell: “During our visit to EY's national tax department, we heard a presentation by a partner in the Quantitative Economics and Statistics department. This department is a division of EY that uses statistical sampling and surveys to analyze economic trends in state, federal and global policy. Our particular focus was on the analysis of the implications of tax policies. An example of this is the effect of carbon taxes on developing nations. The Quantitative Economics and Statistics division creates cross-departmental teams to explore areas using professionals with economic, mathematical and other statistical educational backgrounds. Their findings are shared with clients, organizations and governmental agencies, giving EY an important influence on the development of tax policy in the United States and worldwide.
David Friedman: “I thought that I had a generally good understanding of how the large accounting firms were structured and what each of their particular lines of service entail. But Mr. Mullins was able to teach the class, and me in particular, about what his specific division in the tax service does. His division, Quantitative Economics and Statistics unit mainly performs economic analysis for prospective clients, commercial or federal, and as well as for legislature and institutional purposes.”
3. The Organisation for Economic Co-operation and Development (OECD) Washington Center on Jan. 8, 2015
Overview from Prof. McKinney: The goal of the Organisation for Economic Co-operation and Development (OECD) is to promote policies that improve the economic and social well-being of people from most countries across the globe. Recently the OECD has issued a series of reports on Base Erosion and Profit Shifting. The students heard from Kathleen DeBoer, Deputy Head, Washington Center, Public Affairs and Communications Directorate. During the visit, the students learned about the history of the OECD, the services it provides to countries around the world, and its current initiative to improve global tax policies that combat abusive tax avoidance techniques.
Venessa Sorto: “What I learned and found more useful during the presentation is the explanation on Base Erosion and Profit Shifting (BEPS). Ms. DeBoer explained that types of tax strategies that corporation are using to avoid paying taxes. One of them is transfer pricing and how it has become a global issue. Ms. DeBoer explained that some of these strategies are not illegal but that companies exploit the gray areas that exist to make profits appear in locations where taxes are relative low. The OECD is not against corporations using strategies to lower their taxes but they are against tax cheating.”
4. Internal Revenue Service (IRS) Office of Chief Counsel on Jan. 8, 2015
Overview from Prof. McKinney: The Internal Revenue Service (IRS) is a federal agency responsible for administering and enforcing all internal revenue laws (Internal Revenue Code) in the U.S., except those relating to alcohol, tobacco, firearms, and explosives. Basic IRS activities include serving and educating taxpayers; determining, assessing, and collecting taxes; investigating individuals and organizations that violate tax laws; determining Pension plan qualifications and exempt organization status; and issuing rulings and regulations to supplement the Internal Revenue Code. The Office of the Chief Counsel acts as advisor to the IRS Commissioner on all matters pertaining to the interpretation, administration and enforcement of the Internal Revenue Laws (as well as all other legal matters). The Chief Counsel provides legal guidance and interpretive advice to the IRS, Treasury and to taxpayers. The students met with David Levine and Rose Jenkins, attorneys in the Office of the Chief Counsel who focus on international issues and who participated in the drafting of IRS Notice 2014-52 regarding the issuance of new Treasury Regulations regarding inversions and related transactions. Inversions have been in the business of news of late with several proposed mergers, including the Burger King - Tim Hortons proposed merger. They discussed some of the tax avoidance measures certain corporations were taking and how the proposed regulations might prevent mergers whose goals were purely tax driven.
Manbirpal Singh: “In our meeting, we talked about corporate inversion, abusive transfer pricing, tax avoidance, earnings stripping, tax evasion, and tax laws. Further, we discussed, IRS Internal Revenue Code Subpart F and Section 7874 rules in detail. In fiscal year 2013, the IRS collected $2.9 trillion in revenue and processed more than 240 million tax returns. We also learned about the U.S. worldwide tax system. The IRS visit was very informative and interesting.”
Alison O'Donnell: “The presenters, David Levine and Rose Jenkins, were able to give a good clarification of concepts and I now understand that Subpart F income is income that is excluded from the general practice of deferring foreign sourced income until repatriation. I was also unclear about the definition of a Controlled Foreign Corporation (CFC), but now I understand that it is a foreign company who's voting rights are held by over 50% American shareholders who own over 10% of these same voting rights. These are both very complicated but I am starting to be able to understand them and implement them.”
5. United States Tax Court on Jan. 8, 2015
Overview from Prof. McKinney: The U.S. Tax Court (and its predecessor the Board of Tax Appeals before it) considers disputes about tax deficiencies determined by the Internal Revenue Service prior to payment. The U.S. Tax Court handles the vast majority of tax cases and it is relatively unique in that the taxpayer need not pay the disputed tax until the case is decided. The students met with Tax Court Chief Judge Michael B. Thornton and Clerk of the Court, Robert R. Di Trolio. The Chief Judge and Clerk of the Court discussed the role of the Tax Court in adjudicating tax matters within the U.S. The students were able to sit within the Tax Court's private deliberating chambers and Tax Court courtroom.
Zain Khalid: “Through our visit we learned about the architecture, history and functions U.S. Tax Court. U.S. Tax Court was designed by Victor A. Lundy and built in 1974. The beautiful part of the Tax Court building is 4000-ton cantilevered courtroom block, which projects over the entrance. Moreover, U.S. Tax Court considers disputes about tax deficiencies determined by the Internal Revenue Service prior to payment. In 2014, approximately 31,000 cases were filed in Tax Court. The judges are appointed by the President for a term of 15 years. Currently, there are 18 active judges and 12 senior judges in Tax Court. Overall, our visit of U.S. Tax Court was very informative and exciting.”
Issac Askarinam: “Overall, the professional visit to the U.S. Tax Court has been one my favorites thus far in the course. The visit was unique, due to the impressive architecture of the building and by meeting the Chief Judge Michael B. Thornton. In my opinion, the best part of the visit was listening to Mr. Di Trolio, Clerk of the Court, speak about the history and function of the U.S. Tax Court.”
6. United States Congress Joint Committee on Taxation (JCT) on Jan. 9, 2015
Overview from Prof. McKinney: The Joint Committee on Taxation (JCT) is a nonpartisan committee involved in all stages of the tax legislative process including: assisting Congressional tax-writing committees and members of Congress with development and analysis of legislative proposals, preparing official revenue estimates of all tax legislation considered by Congress, drafting legislative histories for tax related bills, and investigating various aspects of the Federal tax system.
Morgan Parish: “Our visit to the Joint Committee on Taxation was one of my favorites. We had the opportunity to meet with six members of the Joint Committee staff, those being the Chief of Staff, three lawyers, and two accountants. The Chief of Staff, Tom Barthold, was an economist and being able to hear about the Committee’s involvement in the tax legislative process from staff with different backgrounds was very interesting. It was exiting to see where our own accounting degrees could possibly take us.”
7. Citizens for Tax Justice (CTJ) and Institute on Taxation and Economic Policy (ITEP) on Jan. 9, 2015
Overview from Prof. McKinney: The Citizens for Tax Justice (CTJ) and the Institute on Taxation and Economic Policy (ITEP) are sister organizations and are influential public interest research and advocacy organizations focusing on federal, state and local tax policies and their impact upon our nation.
Vanessa Sorto: “Matt Gardner, Executive Director of the Institute on Taxation and Economic Policy, gave us a presentation on the Citizen for Tax Justices mission regarding tax policy. Mr. Gardner discussed some of the avoidance tax techniques corporations currently use and what the organization is doing to help close some of these corporate tax loopholes to avoid tax abusive from corporations. In addition, Mr. Gardner explained how Citizen for Tax Justice fights for tax fairness for middle and lower income families.
Alison O'Donnell: “It was really interesting to get a perspective on how policy is made from a source outside the government itself. This unique quality of the CTJ makes it a great addition to our curriculum.”
8. Offices of Senator Benjamin L. Cardin (Md-D) and Member of the Senate Finance Committee on Jan. 12, 2015
Overview from Prof. McKinney: Senator Benjamin L. Cardin, representing Maryland, is a sponsor of legislation that is meant to deter some of the perceived abuses of corporate tax law. He is a member of the Senate Finance Committee, which has oversight over tax legislation within the Senate. The Senator also is a former member of the House of Representatives and of the House Committee on Ways and Means, which has oversight over tax legislation within the House.
Nikolay Deviatov: “We visited the office of Senator Ben Cardin to talk about tax reform legislation and corporate inversions. Unfortunately the Senator was not able to meet with us, but his staff was very helpful and we were able to talk with a tax law professional regarding the Senator’s upcoming congressional agenda. The presentation was full of valuable information relating to loopholes in the corporate tax system and how Congress is working to fix our taxation system. The entire class had a great opportunity to ask questions about taxes, politics, and how the senator plans to improve the economy. Overall, it was a fantastic visit and a wonderful chance for Smith students to become knowledgeable about tax reform.”
David Friedman: “The most valuable part of the meeting, and of the entire day as a whole, was learning about the congressional experience and the process of what it is like serving in public office.”
9. Congressman Chris Van Hollen (Md-D), Ranking Democratic Member on the House Budget Committee on Jan. 12, 2015
Overview from Prof. McKinney: Congressman Chris Van Hollen is a member of the House of Representatives, representing Maryland, and is a sponsor of legislation that is meant to deter some of the perceived abuses of corporate tax law. He is the ranking Democratic Member on the House Budget Committee and was a member of the House Committee on Ways and Means, which has oversight over tax legislation within the House.
David Friedman: “The visit with Congressman Chris Van Hollen and his Chief of Staff, Bill Parsons, lasted roughly 45 minutes and took place in a conference room in the Longworth House Building in Washington, D.C. The Chief of Staff introduced himself first, discussing the Congressman’s views on tax policy and legislature he has sponsored, or co-sponsored relating to tax reform. Then, the Congressman was able to meet with us for a half hour, which was the highlight of the meeting. He talked in further detail about his various economic-related policies and answered a wide range of questions for the class. The meeting concluded with the class taking a group picture with the Congressman.”
Issac Askarinam: “Congressman Van Hollen and his Chief of Staff provided our class with unique insight to the legislative process and intriguing solutions to the issue of Corporate Inversions.”
10. KPMG Washington National Tax Practice on Jan. 13, 2015
Overview from Prof. McKinney: KPMG Washington National Tax practice advises practice offices of the firm regarding tax policy and acts as consultants to those offices and their clients. KPMG is one of the Big Four accounting firms. First, we met with Mr. Ray Ruiz, who is an Associate Director of campus recruiting for KPMG and who covers the mid-Atlantic region, including UMD. Mr. Ruiz started out by telling us a little about himself. Then we met with Mr. Seth Green, who is a KPMG Principal and is part of the International Corporate Tax Group of the KPMG Washington National Tax practice who discussed tax policy and tax avoidance. Mr. Green first started his presentation by stating some facts about KPMG’s Washington National Tax office. Then, Mr. Green went on to talk about corporate inversions, the reasons as to why they exist, and whom they affect. Next, Mr. Green touched on the Global Transfer Pricing Service that KPMG provides and more importantly, its function. In addition, Mr. Green also described what he and his staff do on a day-to-day basis: helping clients with deals without physically being there, answering specific questions about tax and client engagement, and meeting with clients and offering tax advise. Afterwards, Mr. Ruiz took us on a tour of the office. This was a very informative visit and our class enjoyed it.
Morgan Parrish: “This was my favorite visit so far, the way Mr. Green explained things really clicked with me and I felt like he was very well spoken which also helped.”
Issac Askarinam: “In my opinion, the professional visit to KPMG's national tax office was one of the most memorable of the course. Mr. Green provided tremendous insight into the various topics of tax policy, tax avoidance, and the tax practice of any top accounting firm. Furthermore, Mr. Green spoke frankly on several tough issues - like tax reform and the ethics surrounding tax practice.”
11. PwC Washington National Tax Services on Jan. 14, 2015
Overview from Prof. McKinney: PwC Washington National Tax Services advises practice offices of the firm regarding tax policy and acts as consultants to those offices and their clients. PwC is one of the Big Four accounting firms.
Stephanie Rodrigues: “The visit to the PwC National Tax Service was highly relevant to our course on tax policy and provided us with greater understanding of a few key topics. Kelsey Indorf, Recruiting Manager, introduced us to the firm and its services. She gave a brief overview of PwC's background as a global network of firms and expanded on the services provided by the National Tax Service. Our second speaker was Associate Jessica Lambing, who works in the Transfer Pricing sector of Tax. She explained how related entities price goods, intangible assets, services, and loans. Also, she explained how the Transfer Pricing services of PwC help clients manage transfer-pricing risks and discover opportunities for improving the tax efficiency of their business. We were lucky enough to be joined by PwC Partner, Travis Patton, who spoke further about opportunities at PwC and introduced Manager, Michael Hoffman, a Maryland accounting alum, who discussed his work for Tax Exempt Organizations. He also introduced new concepts such as blocker corporations and UBI (Unrelated Business Income.) The presentation was concluded with related questions, advice for becoming a PwC professional, and a tour of the office.”
Edward White: “One of our speakers, Michael Hoffman, was a Smith School accounting alumnus, and had risen to Manager within PwC's national tax practice. He spoke at length about his work in Exempt Organizations. This discussion was rather unique in terms of subject matter as well as perspective when compared to the other discussions we participated in. Most of the other visits centered primarily on how the tax code applies to for-profit companies, and related mostly to U.S.-based multinationals. In contrast, this discussion centered on the work his team did to minimize the tax burdens of companies that ordinarily are exempt from taxes.”
12. U.S. Department of the Treasury on Jan. 14, 2015
Overview from Prof. McKinney: The U.S. Department of the Treasury is the steward of U.S. economic and financial systems, and an influential participant in the world economy. The basic functions of the Department of the Treasury include (among many others) collecting taxes, duties and monies paid to and due to the U.S.; advising on domestic and international tax policy; enforcing Federal tax laws; and investigating and prosecuting tax evaders. Students met with Deputy Assistant Secretary, Robert Stack, is in charge of international tax policy for the United States.
Edward White: “We were able to speak with Deputy Assistant Secretary Robert Stack who gave a 40-minute presentation outlining the history of the Treasury, and spoke about the current tax policies with which the Treasury is involved. In particular, Mr. Stack spoke about the political climate surrounding comprehensive tax reform and various plans that have been presented over the last several years. In closing, Mr. Stack graciously gave the group a question and answer session for students to clarify his talking points as well as other concerns that they had. After the talk, the class was then given an hour-long tour of the Treasury headquarters building, which was equally interesting. On the tour, our guide gave a very detailed history of several iconic offices and conference rooms as well as the general architecture. At the conclusion of the tour, there was another question and answer session about general treasury history that took place in the pressroom. Overall, the visit was extremely informative and academically invaluable.”
13. Deloitte Washington National Tax Practice on Jan. 15, 2015
Overview from Prof. McKinney: Deloitte Washington National Tax Practice advises practice offices of the firm regarding tax policy and acts as consultants to those offices and their clients. Deloitte is one of the Big Four accounting firms.
Hyun An: “The Deloitte visit at the firm's McLean office was arranged by Haley Snyder, UMD's campus recruiter for the firm. She brought in Jeff Kummer and Victoria Glover from Washington National Tax services to talk to the class about their work and tax policy. Mr. Kummer and Ms. Glover talked about potential consequences of Base Erosion Profit Sharing from OECD, and the general effects of politics in tax policy, and where it is headed in the future regarding reform. They outlined a tax reform proposition from former Senator David Camp, and the many aspects of his proposition that may be implemented in the near future like repealing accelerated depreciation along with LIFO and LCM in order to increase tax revenues. After their expert presentation, the class had an opportunity to talk to Nick Stokes, a Maryland alumni at Deloitte Tax, to answer potential questions that the class had and network with the students over lunch that was provided by the firm.
David Friedman: “This was one of my favorite visits. The speakers talked about how politics is integrated into tax reform and tax policy. It was incredibly informative and the entire presentation was tailored perfectly to our class.”
Stephanie Rodrigues: “Our speakers were Jeff Krummer, Director, and Victoria Glover, Manager, of the National Tax Practice. Their presentation was very well structured and gave us immense insight into the politics behind tax reform.”
14. Embassy of Ireland on Jan. 15, 2015
Overview from Prof. McKinney: The Republic of Ireland has been frequently in the news as a result of the number of large U.S. and other multinational corporations that have formed subsidiaries in the country. The newspapers and other U.S. government reports assert that some of these corporations are using the laws of the country to avoid their fair share of U.S. corporate taxes.
Yiyao Wang: “During the interactive meeting with the Economic Counselor Alan Gibbons, the Economy of Ireland and Irish tax policies were discussed. With respect to students' concern about ‘Double Irish,’ Mr. Gibbons illustrated the issue by talking about Ireland's reaction to the OECD's work on BEPS. His sharing of his own career path made the visit more informative and impressive.”
Issac Askarinam: “I was surprised and genuinely pleased that Mr. Gibbons spoke freely on certain controversial issues, like the ‘Double Irish’ and Corporate Inversions.”
15. Department of Justice, Criminal Appeals and Tax Enforcement Policy Section (CATEPS) on Jan. 16, 2015
Overview from Prof. McKinney: The Tax Division of the Department of Justice handles the criminal and some civil litigation for the United States. We met primarily with Frank Cihlar, Section Chief of the Criminal Appeals and Tax Enforcement Policy Section within the Department of Justice. We also met with Caroline Ciraolo, Principal Deputy Assistant Attorney General in charge of the DOJ Tax Division.
Adam Warner: “For the majority of the time we spent at the DOJ, Frank spoke to us about the matters that his team, Caroline, and the rest of his coworkers dealt with. He went into great detail about what he does on a day to day basis as well as what the Tax Division of the Department of Justice does to help keep United States Corporations in tact with the U.S. tax laws and regulations. His presentation was extremely informative and it helped clarify many tax laws that seem unclear to the public eye. Additionally, Frank's main purpose of conversation was to help explain what the Department of Justice does on a regular basis to compel a plethora of multinational corporations from avoiding US tax codes and stop the non-repatriation of U.S. dollars from coming back to the U.S.”
Nikolay Deviatov: “The Department of Justice (DOJ) visit was unique in that they were able to reference the information we learned and provide further context to those situations that were not covered in our textbook.”