"Based on IRS experience, basic compliance laws have not been aggressively reviewed for years, and people may have forgotten some of the fundamentals. They are not complicated rules, they just need to be redefined," said Cate Livingston Fernandez, branch chief of the IRS's Executive Compensation Branch.

In 2002, the annual median compensation for the chief executive officers of the 100 largest companies in the United States was more than $33 million. CEO pay has grown 442 percent since 1980, according to Fortune magazine.

During the Webcast, tax professionals were asked whether their corporate clients have been asking for advice on their growing executive packages. Fifty-four percent said none of their clients had asked for counsel this year, illustrating the disconnect that exists between tax professionals and executives.

The IRS said it is taking steps to close this gap. Newly-trained audit teams will review 24 sample cases to identify areas of concern. The auditors will focus on eight primary areas: non-qualified deferred compensation, stock-based compensation, a cap of $1 million to compensate officers of public companies, golden parachute arrangements, split dollar life insurance, family limited partnerships, offshore employee leasing, and fringe benefits.

Based on the results from these audits, the IRS will determine the future of its executive compensation review program.

C. Frederick Oliphant, a member of Miller & Chevalier Chartered, is in full support of this undertaking. "The tax professional is usually playing catch up, as they are brought in at the eleventh hour to look at executive compensation packages. This initiative may get tax professionals involved earlier in the process."

The IRS hopes its efforts will open up a dialogue between tax professionals and executives on issues such as misunderstood tax laws, lack of information regarding deductions, and matching principles.

"The IRS wants to discover where practitioners need additional guidance. We will look at repeated errors in the sample cases to give us a view of where we need to be clearer," said Keith Jones, a director of field specialists at the IRS's Large and Mid-Size Business Division.

Tax Talk Today is co-sponsored by the IRS.