Tax Matters: IRS Organization Changes and a Hard-Hitting Tax Court Case
Originally published in the Michigan Business Law Journal:
The IRS has implemented further organizational changes in the examination division. This is particularly true of LB&I (Large Business and International).
Some of the structural changes include the elimination of industry designations and a move to issue-based examinations. LB&I audit examination will now be based on perceived compliance risk. The determination will be based upon the utilization of data analytics and specified staff to “issue spot.” These self-described streamlined audits will quickly target specific areas of IRS enforcement. Agents will move quickly with rapid and focused Information Document Requests or IDR’s. Expect the quick or even preemptive use of IRS summons authority or even quickly closed “unagreed” examinations.
IRS Publication 5125 provides specific information. Taxpayers and their representatives should consult this publication upon receipt of an IRS examination notice as it sets forth the procedural IRS playbook. An important note is that an LB&I examination could have multiple agents with each agent examining a discreet area of examination such as research tax credits, employment taxes, or international issues with each agent issuing separate IDR’s.
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