The Large Business and International Division (LB&I) of the IRS issued a memorandum (LB&I-04-0320-0007) dated March 25, 2020 that suspended the enforcement process information document requests (IDR) through July 15, 2020 in some scenarios where the COVID-19 pandemic make it difficult for a taxpayer to respond.
Under LB&I examination procedures, an examiner first works with a taxpayer to determine an agreed date for the taxpayer to respond to a request for information, IDR, issued during an examination. Once a date is agreed on by the taxpayer and LB&I examiner, the taxpayer must submit the requested information by that date. If a response is not provided or the response is incomplete, the examiner can begin enforcement procedures. Prior to beginning enforcement procedures, the LB&I examiner can grant an extension of 15 business days.
The LB&I enforcement procedures move through a delinquency notice, a pre-summons letter and then a summons. The delinquency notice is issued within 10 days of the beginning of the enforcement process, and has a response date of no more than 10 business days from the date of the notice. If the taxpayer does not appropriately respond to the delinquency notice, the LB&I examiner issues a pre-summons letter. That letter is also issued within 10 business days of the delinquency letter’s due date, and, as the enforcement procedures state, is sent to “a level of management above the management official that received the delinquency notice.” The pre-summons letter also has a 10 business day period for the taxpayer to respond. If the taxpayer still does not appropriately respond, the LB&I examiner works with LB&I counsel to issue a summons for the information.
The LB&I memorandum provides that LB&I examiners may continue to issue IDRs and receive a response from the taxpayer. Further, the memorandum clarifies that the enforcement process suspension only applies to taxpayers who are unable to timely respond to an IDR due to the COVID-19 pandemic. Additionally, an LB&I manager may continue the IDR enforcement when “interests of tax administration warrant” the enforcement. The memorandum provides examples of a soon to expire statute of limitation on the assessment of tax, listed transactions and fraud as reasons for a manger to continue enforcement.
The memorandum only applies to the LB&I division, and taxpayers under examination by another division, such as the Small Business/Self Employed Division, should contact the examining agent to request additional time or special consideration if the COVID-19 pandemic makes a response difficult.
Please contact a member of the WNT Tax Controversy team with any questions.
