United States

IRS rolls out new international tax issue-based compliance campaigns

TAX ALERT  | 

The IRS’s Large Business and International (LB&I) division has recently announced several new international tax compliance campaigns as part of its most recent compliance campaign release. Initially rolled out in Jan. 2017, the LB&I division will be targeting several specific compliance issues as part of a new audit strategy referred to as ‘campaigns.’ This campaign based audit strategy is designed to help build a supportive infrastructure inside LB&I and redefine large business compliance work. Taxpayers should take note because these campaigns are important indicators of where the IRS will spend its audit resources.

Since the initial roll out, the LB&I division has issued six separate releases – Nov. 2017, Mar. 2018, May 2018, July 2018, Sept. 2018, and Oct. 2018 – identifying a plethora of campaign items, ranging in focus from pass-through compliance to international tax withholding.  Of the LB&I campaigns announced thus far, 25 are issue-based compliance campaigns directed at businesses and taxpayers with foreign operations or activity.

Below is a listing of the international tax specific campaigns of the most recent release (Oct. 2018), along with the specific practice area, treatment stream (planned IRS method of addressing noncompliance) and the lead executive. The IRS previously acknowledged that some of its campaigns may require modification because of the enactment of the Tax Cuts and Jobs Act and it is continuing to review the law’s impact.

Campaign

Practice area

Focus

Treatment stream

Lead executive

Individual Foreign Tax Credit Phase II

Withholding and international individual compliance

Addresses taxpayers who have claimed the foreign tax credit but do not meet the requirements

Variety, including examination

John Cardone

Offshore Service Providers

Withholding and international individual compliance

Addresses taxpayers who engaged offshore service providers to conceal ownership of foreign financial assets

Issue-based examinations

John Cardone

FATCA Filing Accuracy

Withholding and international individual compliance

Addresses foreign financial institutions and non-financial foreign entities that do not meet all their FATCA reporting obligations

Variety, including termination of the FATCA status

John Cardone

1120-F Delinquent Returns Campaign

Cross-border activities

Encourage foreign entities to timely file Form 1120-F returns and address compliance risk for delinquent 1120-F returns

External education outreach programs and field examinations of compliance risk delinquent returns

Orrin Byrd

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