On July 2, 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 Jan. 2017, Nov. 2017, March 2018 and May 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 controlling statutory framework.
LB&I originally created the campaigns to ensure taxpayer examinations remain issue based. The campaigns are intended to focus on compliance issues that present the greatest risk of non-compliance. Like the previously announced campaign issues, the new five campaign topics, were identified through the 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. For example, we have learned that the IRS has recently opened a large number of audits (over 50 in one city alone) in major cities across the U.S. to support only one of the international campaign topics.
Following are the new campaigns, practice areas, focus, treatment stream and lead executives:
Campaign |
Practice area |
Focus |
Treatment stream |
Lead executive |
Restoration of Sequestered Alternative Minimum Tax (AMT) Credit Carryforward |
Enterprise Activities |
Ensure that taxpayers do not restore sequestered amounts of their AMT credit provided for by section 168(k)(4) |
Soft letters to encourage self-correction and monitor for subsequent compliance |
Gloria Sullivan |
S Corporation Distributions |
Pass Through Entities |
Ensure proper reporting of tax consequences of the following distributions:
|
Issue-based examination, tax form change suggestions and stakeholder research |
Holly Paz and Cliff Scherwinski |
Virtual Currency |
Withholding & International Individual Compliance |
Ensure that U.S. persons with unreported virtual currency transactions are compliant with their reporting responsibilities per IRS Notice 2014-21 |
Taxpayer outreach, examinations and solicitation of taxpayers and practitioners in education efforts, future guidance and development of practice units |
John Cardone |
Repatriation via Foreign Triangular Reorganizations |
Cross-Border Activities |
Ensure that taxpayers comply with the provisions of the Notice 2016-73, which curtails the claimed ‘tax-free’ repatriation of basis and untaxed Controlled Foreign Corporation earnings following the use of certain foreign triangular reorganization transactions |
Issue-focused examinations: Identify and challenge transactions by educating and assisting examination teams |
John Hinding and Barbara Harris |
Section 965 Transition Tax |
Cross-Border Activities |
Ensure that taxpayers comply with section 965 that requires U.S. shareholders to pay a transition tax, immediately or in installments for up to eight years on untaxed foreign earnings of certain specified foreign corporation as if those earnings had been repatriated to the U.S. |
Outreach campaign to raise awareness of filing and payment obligations |
John Hinding
|
