LB&I Rolls Out New Issue-Based Compliance Campaigns; Considering Impact of Regulatory Freeze

CCH Tax Day Report

The IRS Large and International Business (LB&I) Division has identified and described the initial rollout of 13 new campaigns. These campaigns help LB&I move in the direction of issue-based examinations and a compliance campaign process where the organization decides which compliance issues present risks and the best way to respond to such risks.

O’Donnell was also asked how LB&I planned to deal with the current regulatory freeze issued by President Trump’s administration (TAXDAY, 2017/02/01, W.1). “The executive orders coming out are being reviewed by the Service and that manner in which we will respond to them is still under consideration,” he stated.

“Effectively, we’re thinking about [the campaigns] as a holistic response to an item of either known or potential compliance risks,” LB&I Commissioner Doug O’Donnell, told reporters on January 31. He stopped short of suggesting that compliance problems are pervasive in nature. “We are not saying that we know that we have a problem, nor that every instance where one of these campaign items might be on a return that there is noncompliance. What we are saying is that we either believe, or have indication that, there is risk, or we are concerned that there could be and we need to look at it in more depth,” O’Donnell stated.

The 13 campaigns correspond with a number of different potential tax issues, such as the Code Sec. 48C energy credit, micro-captive insurance, related-party transactions and repatriation. The campaigns themselves fall within specific LB&I practice areas and have lead executives at the helm.

“We look at the [transactions on a return] where we think there is risk, and we respond according to what we see,” O’Donnell described. “That response typically has been an examination. But what we are doing going forward [is] changing taxpayer behavior where there is noncompliance to compliance. So our efforts with treatment streams will not be limited to audits,” he said.

“In thinking of [the campaigns], we are thinking about describing risks, describing what we would like to see a taxpayer do, and working through that whole process in a campaign utilizing a number of treatment streams.” O’Donnell said when describing LB&I’s aims with the campaigns. He described what LB&I is currently implementing as “a new way of conducting business as usual and dealing with issues of potential noncompliance and how we respond to them.”

By Jalisa Mathis, Wolters Kluwer News Staff

IRS Announces Initial Rollout of Large Business and International Campaigns

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