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IRS adds three new compliance campaigns (LB&I division)

IRS adds three new compliance campaigns (LB&I division)

The IRS Large Business & International (LB&I) division continues to expand its list of compliance campaigns, with three new campaigns being added this week—thus bringing the total of compliance campaigns to 53 identified and selected to date.

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As noted in an IRS release, the three new campaigns concern:

  • Captive services providers (concerning transfer pricing and the arm’s length pricing for transactions between controlled entities, including transactions in which a foreign captive subsidiary performs services exclusively for the parent or other members of the multinational group). The goal of this campaign is to determine that U.S. multinational companies are paying their captive service providers no more than arm’s length prices. The IRS “streams” for this campaign will be issue-based examinations and soft letters.
  • Offshore private banking (concerning taxpayers with transactions or accounts at offshore private banks). This campaign addresses tax noncompliance and the information reporting associated with these offshore accounts, and will initially address tax noncompliance through the examination and soft-letter treatment streams. Additional treatment streams may be developed based on feedback received throughout the campaign.
  • Loose-filed Forms 5471 (concerning incorrectly filed Form 5471, Information Return of U.S. Persons With Respect to Certain Foreign Corporations, that must be attached to an income tax return or to a partnership or exempt organization return, if applicable). The IRS noted that some taxpayers are sending a Form 5471 without attaching it to a tax return (or partnership or exempt organization return). The goal of this campaign is to improve compliance with the requirement to attach a Form 5471 to an income tax, partnership or exempt organization return.

Background

Campaigns represent the IRS’s shift from entity-based to issue-based examinations, with a focus on those issues that have been determined to present a risk of noncompliance. The IRS’s stated goal with its campaign initiative is to improve tax return and issue selection and make the greatest use of limited IRS resources.  Each campaign is addressed using one or more “treatment streams” that include issue-based examinations, soft letters encouraging voluntary self-correction, and stakeholder outreach. 


Read the full list of LB&I compliance campaigns (as of April 16, 2019). 

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