Large Business and International Division
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You Can Now Submit Your Letter Rulings and Determinations to the IRS Electronically

Rev. Proc. 2020-29 temporarily allows taxpayers to submit certain requests for letter rulings and determinations to the Internal Revenue Service (IRS) electronically. Electronic submissions will be permitted until the revenue procedure is superseded or modified, but taxpayers may still make paper submissions. Electronic submissions are permitted for requests for letter rulings, closing agreements, determination letters, and information letters from the Associate Chief Counsel Offices and for determination letters from the Large Business and International (LB&I) Division. However, procedures for submissions to the IRS Small Business/Self Employed Division, Wage and Investment Division, or Tax Exempt and Government Entities Division are unchanged. The revenue procedure permits electronic submission by either fax or compressed and encrypted email, although the IRS prefers fax submissions for security reasons. Taxpayers submitting through email must include a...

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Weekly IRS Roundup October 29 – November 2, 2018

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of October 29 - November 2, 2018: October 30, 2018: The IRS issued a notice of public hearing on November 28, 2018, regarding the proposed regulations the first-year additional depreciation deductions under section 168(k). October 30, 2018: The IRS Large Business and International Division in an announcement identified five compliance campaigns it approved, which are Individual Foreign Tax Credit Phase II, Offshore Service Providers, FATCA Filing Accuracy, 1120-F Delinquent Returns Campaign and Work Opportunity Tax Credit. We recently blogged about this here. October 31, 2018: The IRS and the Treasury submitted proposed regulations that would reduce the amount determined under Internal Revenue Code Section 956 with respect to certain domestic corporations. November 2, 2018: The IRS released its weekly list of written determinations...

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LB&I Announces Five New Campaigns

On September 10, 2018, the Internal Revenue Service (IRS) Large Business and International (LB&I) Division announced five new audit “campaigns.” These new campaigns follow: (1) the initial 13 campaigns announced on January 31, 2017; (2) followed by 11 campaigns announced on November 3, 2017; (3) five campaigns announced on March 13, 2018; six campaigns announced on May 21, 2018; and five campaigns announced on July 2, 2018. The following five new LB&I campaigns are listed by title and description: Section 199 – Claims Risk Review Public Law 115-97 repealed the Domestic Production Activity Deduction (DPAD) for taxable years beginning after December 31, 2017. This campaign addresses all business entities that may file a claim for additional DPAD under Internal Revenue Code (IRC) Section 199. The campaign objective is to ensure taxpayer compliance with the requirements of IRC Section 199 through a claim risk review assessment and issue-based examinations...

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LB&I Announces Six New Campaigns

On May 21, 2018, the Internal Revenue Service (IRS) Large Business and International Division (LB&I) announced the identification and selection of six new campaigns. These new campaigns follow the initial 13 campaigns announced on January 31, 2017, followed by 11 campaigns announced on November 3, 2017, and 5 campaigns announced on March 13, 2018. The following are the six new LB&I campaigns by title and description: Interest Capitalization for Self-Constructed Assets When a taxpayer engages in certain production activities they are required to capitalize interest expense under Internal Revenue Code (IRC) Section 263A. Interest capitalization applies to interest a taxpayer pays or incurs during the production period when producing property that meets the definition of designated property. Designated property under IRC Section 263A(f) is defined as (a) any real property, or (b) tangible personal property that has: (i) a long useful life (depreciable...

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IRS Releases Several Transfer Pricing Directives

The Internal Revenue Service (IRS) Large Business and International (LB&I) Division recently released several directives (LB&I Directives) geared toward transfer pricing. LB&I acknowledges that significant LB&I resources are devoted to transfer pricing issues, and such issues make up a substantial portion of the LB&I inventory. It appears that these directives are aimed at ensuring that LB&I resources are utilized in the most efficient and effective manner on transfer pricing issues. A link to each LB&I Directive and a short summary is provided below. Interim Instructions on Issuance of Mandatory Transfer Pricing Information Document Request (IDR) in LB&I Examinations This LB&I Directive advises LB&I examiners that it is no longer necessary to issue the mandatory transfer pricing information document request (IDR) to taxpayers that have filed Form 5471, Information Return of U.S. Person with Respect To Certain Foreign...

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International Practice Units – Competent Authority

In recent months, the Internal Revenue Service (IRS) Large Business and International Division (LB&I) has issued a variety of international tax practice “units” as part of its process to improve tax compliance from identified groups of business taxpayers. The overall process also includes short descriptions of respective “campaigns” and briefly describes the agency’s designated, tailored treatment or treatments for each campaign. Most recently, it issued a unit on the mutual agreement procedure (MAP), commonly referred to as the Competent Authority Process under bilateral tax treaties (Doc Control No. ISO/P/01_07_03-01). The purpose of the unit is to provide IRS examiners (for the most part, the unit does not address foreign-initiated adjustments) with clear guidance on their responsibility in situations where proposed adjustments will be made in a context in which the taxpayer could potentially face double taxation, consistent with the most recent...

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

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. Section 48C Energy Credit Campaign Section 48C provides a tax credit equal to 30 percent of the “qualified investment” in a “qualifying advanced energy project." This tax credit was created as part of American Recovery and Reinvestment Act of 2009 and was intended to encourage investment in domestic manufacturing and “new energy”-type projects. To claim the credit, taxpayers had to go through a rigorous application process. Much like a grant program, only certain projects were selected and awarded tax credits. The credit was subject to a nationwide limitation of $2.3 billion, which was allocated among eligible...

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The View from Here: LB&I’s Cross-Border Activities Campaigns Webinar

On Tuesday, May 23, 2017, the Internal Revenue Service (IRS) Large Business and International Division (LB&I) hosted its sixth in a series of eight webinars regarding LB&I Campaigns. Our previous coverage of LB&I Campaigns can be found here. The webinar focused on two cross-border activities campaigns: (1) the Repatriation Campaign and (2) the Form 1120-F Non-Filer Campaign. Below, we summarize LB&I’s comments on the new campaigns. Repatriation Campaign In general, the active earnings of foreign subsidiaries are not subject to tax until repatriated to the United States. Typically, those repatriations would be treated as dividends and would be subject to tax. LB&I stated that, through examination experience, it has observed that some taxpayers have engaged in techniques to permit repatriation from such entities while inappropriately avoiding US taxation. LB&I developed the Repatriation Campaign with three goals in mind. First, LB&I...

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