On Sept. 10, 2018, the Large Business & International (“LB&I”) Division of the IRS announced that it was adding five new compliance campaigns to the list of campaigns previously announced in January 2017, November 2017, March 2018, May 2018 and July 2018. LB&I continues to review legislative changes resulting from legislation enacted on Dec. 22, 2017, commonly referred to as the Tax Cuts and Jobs Act, to determine which existing campaigns, if any, could be impacted as a result of a change in the law.
LB&I created the campaigns to move toward issue-based examinations of taxpayers. The campaigns are intended to focus on compliance issues that present the greatest risk of non-compliance. Like the previously announced campaign issues, the five new campaign topics were identified through suggestions from IRS compliance employees and LB&I data analysis. Taxpayers should take note because these campaigns are important indicators of where the IRS will spend its audit resources.
The following are the new campaigns, practice areas, focus, treatment stream and lead executive:
Campaign |
Practice Area |
Focus |
Treatment Stream |
Lead Executive |
IRC Section 199 – Claims Risk Review |
Enterprise Activities |
Business entities that may file a claim for additional DPAD under IRC Section 199 |
Claim risk review assessment and issue-based examinations of claims with the greatest compliance risk
|
Scott Ballint, director of Corporate Issues and Credits |
Syndicated Conservation Easement Transactions |
Eastern Compliance and Enterprise Activities |
Encourage taxpayer compliance and ensure consistent treatment of similarly situated taxpayers by ensuring the easement contributions meet the legal requirements for a deduction, and the fair market values are accurate. |
The initial treatment stream is issue-based examinations. Other treatment streams will be considered as the campaign progresses. |
Joseph Banks, director of Field Operations Southeast, Eastern Compliance; and Scott Ballint, director of Corporate Issues and Credits, Enterprise Activities
|
Foreign Base Company Sales Income: Manufacturing Branch Rules
|
Cross Border Activities |
Identify and select for examination returns of U.S. shareholders of Controlled Foreign Corporations (CFCs) that may have underreported subpart F income based on certain interpretations of the manufacturing branch rules.
|
Issue-based examinations |
Orrin Byrd, director of Field Operations East |
1120F Interest Expense/Home Office Expense |
Cross Border Activities |
Identification of aggressive positions in the areas of the interest expense rules of Treasury Regulation Section 1.882-5 and the Home Office expense allocation rules of Treasury Regulation Section 1.861-8 in the calculation of effectively connected income.
|
Issue-based examinations |
Orrin Byrd, director of Field Operations East |
Individuals Employed by Foreign Governments & International Organizations
|
Withholding & International Individual Compliance |
Outreach and education by partnering with the Department of State’s Office of Foreign Missions to inform employees of foreign embassies, consular offices and international organizations of their withholding and reporting requirements.
|
Issuing soft letters and conducting examinations |
John Cardone, director, Withholding & International Individual Compliance
|
