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IRS Announces More LB&I Campaigns!

by K. Christy Vouri-Misso, Kevin Spencer and McDermott Will & Emery | Apr 18, 2019 | IRS Audits, IRS Guidance, Uncategorized

The Internal Revenue Service (IRS) Large Business and International (LB&I) Division continues to churn out new audit “campaigns.” For our prior coverage, please click here. The most recent set of campaigns were announced on April 16, 2019, bringing the grand total to 53 campaigns since the program’s initial release on January 13, 2017. The IRS explains that the goal of the campaigns is to “improve return selection, identify issues representing a risk of non-compliance, and make the greatest use of limited resources.”

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LB&I Announces Five New Campaigns

by McDermott Will & Emery and McDermott Will & Emery | Jul 10, 2018 | IRS Guidance, Uncategorized

On July 2, 2018, the Internal Revenue Service (IRS) Large Business and International (LB&I) Division announced the identification and selection of five new campaigns. These new campaigns follow the initial 13 campaigns announced on January 31, 2017, followed by 11 campaigns announced on November 3, 2017, 5 campaigns announced on March 13, 2018, and six campaigns announced on May 21, 2018.

The following are the five new LB&I campaigns by title and description:

Restoration of Sequestered AMT Credit Carryforward

LB&I is initiating a campaign for taxpayers improperly restoring the sequestered Alternative Minimum Tax (AMT) credit to the subsequent tax year. Refunds issued or applied to a subsequent year’s tax, pursuant to IRC Section 168(k)(4), are subject to sequestration and are a permanent loss of refundable credits. Taxpayers may not restore the sequestered amounts to their AMT credit carryforward. Soft letters will be mailed to taxpayers who are identified as making improper restorations of sequestered amounts. Taxpayers will be monitored for subsequent compliance. The goal of this campaign is to educate taxpayers on the proper treatment of sequestered AMT credits and request that taxpayers self-correct.

S Corporation Distributions

S Corporations and their shareholders are required to properly report the tax consequences of distributions. We have identified three issues that are part of this campaign. The first issue occurs when an S Corporation fails to report gain upon the distribution of appreciated property to a shareholder. The second issue occurs when an S Corporation fails to determine that a distribution, whether in cash or property, is properly taxable as a dividend. The third issue occurs when a shareholder fails to report non-dividend distributions in excess of their stock basis that are subject to taxation. The treatment streams for this campaign include issue-based examinations, tax form change suggestions, and stakeholder outreach.

Virtual Currency

US persons are subject to tax on worldwide income from all sources including transactions involving virtual currency. IRS Notice 2014-21 states that virtual currency is property for federal tax purposes and provides information on the US federal tax implications of convertible virtual currency transactions. The Virtual Currency Compliance campaign will address noncompliance related to the use of virtual currency through multiple treatment streams including outreach and examinations. The compliance activities will follow the general tax principles applicable to all transactions in property, as outlined in Notice 2014-21. The IRS will continue to consider and solicit taxpayer and practitioner feedback in education efforts, future guidance, and development of Practice Units. Taxpayers with unreported virtual currency transactions are urged to correct their returns as soon as practical. The IRS is not contemplating a voluntary disclosure program specifically to address tax non-compliance involving virtual currency.

Repatriation via Foreign Triangular Reorganizations

In December 2016, the IRS issued Notice 2016-73 which curtails the claimed “tax-free” repatriation of basis and untaxed CFC earnings [...]

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LB&I’s Final Campaigns Webinar: Section 48C Energy Credits and Completed Contract Method for Land Developers

by Jeffrey M. Glassman and McDermott Will & Emery | Jun 27, 2017 | IRS Audits, IRS Guidance, Tax Refunds, Uncategorized

On June 20, 2017, the Internal Revenue Service (IRS) Large Business and International Division (LB&I) hosted its final webinar regarding LB&I Campaigns. Our previous coverage of LB&I Campaigns can be found here. The webinar focused on two campaigns: (1) Section 48C Energy Credits and (2) Land Developers – Completed Contract Method.

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Understanding LB&I “Campaigns” – The Second Webinar

by Jeffrey M. Glassman | Apr 13, 2017 | IRS Audits, IRS Guidance, Uncategorized

On March 28, 2017, EY and the Internal Revenue Service (IRS) held a joint webcast presenting the Large Business & International’s (LB&I) new “Campaign” examination process. This was the IRS’s second in a planned eight-part series about Campaigns. The IRS speakers for the presentation were Tina Meaux (Assistant Deputy Commissioner Compliance Integration) and Kathy Robbins (Enterprise Activity Practice Area). We previously blogged about Campaigns on February 1, 2017 (link), and the first Campaigns webinar on March 8, 2017 (link).

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Understanding LB&I “Campaigns”

by Kevin Spencer and Robin L. Greenhouse | Mar 8, 2017 | IRS Audits, IRS Guidance, Uncategorized

On March 3, 2017, KPMG and the Internal Revenue Service (IRS) held a joint webcast presentation regarding the Large Business & International’s (LB&I) new “Campaign” examination process. The IRS speakers for the presentation were Tina Meaux (Assistant Deputy Commissioner Compliance Integration) and Kathy Robbins, Director (Enterprise Activities Practice Area). On February 1, 2017, we blogged about this new IRS program.

The IRS explained that Campaigns are a fundamental change in the way the IRS will conduct examinations in the future, and are the result of the IRS’s ever-shrinking resources. The Campaigns reflect the LB&I Division’s need to focus on risks, drive compliance objectives, and efficiently and effectively respond with a variety of work streams.

The general principles that guide the Campaign program are:

Flexible and well-trained work force. Because of funding cuts, the IRS has not been able to hire examiners in recent years. In connection with the Campaigns, the IRS will implement additional training, including “just-in-time” training, to help the IRS react to a dynamic examination environment.
Better selection of work. The IRS is using data analytics and internal and external feedback to assist in shaping Campaigns.
Tailored treatment. The IRS is developing an integrated process to identify compliance risks, and identify the work streams needed to address those risks.
Integrate feedback loop. This is the cornerstone of the Campaign program. The IRS admitted that it cannot implement an effective and efficient process without feedback from both internal and external stakeholders. To be successful the feedback needs to be “just-in-time,” not merely post-audit.

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Weekly IRS Roundup March 20 – March 24, 2023

by Sarah M. Raben | Mar 27, 2023 | IRS Guidance, Tax Reform, Tax Refunds

Check out our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of March 20, 2023 – March 24, 2023.

March 20, 2023: The IRS released Internal Revenue Bulletin 2023-12, which highlights the following:

Notice 2023-22: This notice advises state and local housing credit agencies that allocate low-income housing tax credits under Section 42, as well as states and other issuers of tax-exempt private activity bonds under Section 141, of the population figures to use in calculating the (1) state housing credit ceiling under Section 42(h), (2) private activity bond volume cap under Section 146 and (3) private activity bond volume limit under Section 142(k).

March 20, 2023: The IRS announced tips to avoid processing delays and refund adjustments as the April 18, filing deadline approaches. The tips include gathering all tax documents, filing electronically, using the correct filing status, double-checking names and social security numbers, answering the digital assets question and reporting all taxable income.

March 20, 2023: The IRS announced a new entry into the annual Dirty Dozen list of tax scams: promoter claims involving the Employee Retention Credit (ERC). Some third parties continue to widely advertise services that target taxpayers who may not be eligible for the ERC. The advertisements, along with the increased prevalence of websites touting how easy it is to qualify for the ERC, suggest that the abusive claims may be legitimate. The annual list of schemes is aimed at raising awareness of aggressive promoters and con artists. These schemes put people at financial risk and increase the chances of identity theft.

March 20, 2023: The IRS released Tax Tip 2023-35, providing options for taxpayers who cannot pay their tax bill by April 18. The IRS also reminded taxpayers to still file their tax returns even if they cannot pay to avoid a failure-to-file penalty.

March 21, 2023: The IRS announced that it is requesting feedback regarding the tax treatment of a non-fungible token (NFT) as a collectible under the tax law in Notice 2023-27. An NFT is a unique digital identifier that is recorded using distributed ledger technology and may be used to certify the authenticity and ownership of an associated right or asset. The guidance also requests comments on the treatment of NFTs as collectibles and describes how the IRS intends to determine whether an NFT is a collectible until further guidance is issued.

March 21, 2023: The IRS issued proposed regulations that provide guidance on the implementation of the Advanced Manufacturing Investment Credit, established by the Creating Helpful Incentives to Produce Semiconductors Act of 2022 (CHIPS Act). The credit incentivizes the manufacture of semiconductors and semiconductor manufacturing equipment within the United States.

March 21, 2023: The IRS cautioned taxpayers to watch out for scammers using email and text messages to [...]

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