On March 28, 2018, the Treasury Department and Internal Revenue Service (IRS) published Proposed Regulation § 301.7601-1(b)(3)(i) and (ii) which permits the IRS to hire outside specialists to assist in determining the correctness of a taxpayer’s tax liability. The Proposed Regulation also contains an exception specifically prohibiting the IRS from hiring outside attorneys to review summoned information or question witnesses providing testimony under oath.

The participation of outside attorneys became controversial during the audit of a large technology company when the IRS hired an outside law firm to augment its own resources for the transfer pricing audit of the company. On October 16, 2017, in response to the requirements of Executive Order 13789, requiring the Secretary of the Treasury to review all regulations issued after January 1, 2016, the Treasury Department and the IRS announced that they were considering proposing an amendment to Treas. Reg. § 301.7602-1(b)(3) in order to narrow the scope with respect to non-government attorneys. See our prior coverage here.
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In January 2017, the Internal Revenue Service (IRS) Large Business & International (LB&I) Division released its announcement related to the identification and selection of its campaigns. The primary purpose of the campaigns was to end the resource intensive continuous audit program (where the LB&I audits a large taxpayer year after year for decades) and a move to an issue focused coordinated approach. LB&I originally identified 13 campaign issues and in November 2017, identified 11 additional campaigns and on March 13, 2018, identified 5 additional campaigns. We have extensively discussed LB&I’s campaign examination process including posts on Understanding LB&I “Campaigns”, Run for Cover – IRS Unveils Initial “Campaigns” for Audit, IRS Continues to Barrage Taxpayers with New Campaigns.

At the March 9 meeting of the Federal Bar Association Section on Taxation, an LB&I executive indicated that the rollout of the campaigns may have hit a snag. John Hinding, Director of Cross Border Activities at LB&I, reported that “the campaign work is still a minority of our work,” and its implementation has been slow going. According to Hinding, “A lot of the issue spotting that we’d like to do is driven by data analysis, and changes to systems to allow that is a lengthy process to get in place.”
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On November 8, 2017, Facebook, Inc. and Subsidiaries (Facebook) filed a complaint in the District Court for the Northern District of California asserting that the Internal Revenue Service (IRS) had improperly denied Facebook access to Internal Revenue Service (IRS) Appeals. Facebook’s complaint seeks a declaratory judgment that the IRS unlawfully issued Revenue Procedure 2016-22, 2016-15 I.R.B. 1, and unlawfully denied Facebook its statutory right to access an independent administrative forum. Facebook also requests injunctive relief from the IRS’s unlawful position, or action in the nature of mandamus to compel the IRS to provide Facebook access to an independent administrative forum.
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In early 2017, the IRS updated its Golden Parachute Payments Audit Technique Guide for the first time since its 2005 issuance. While intended as an internal reference for IRS agents conducting golden parachute examinations, the Audit Technique Guide offers valuable insight for both public and private companies, and recipients of golden parachute payments, into how

Not only should companies worry about the Internal Revenue Service (IRS) auditing their returns, but they also have to be aware of a potential assault from within. Indeed, current and former employees have an incentive to air all of your tax issues with the hope of being rewarded for the information.

Section 7623(b) was added