Last week, the IRS Large Business and International division (LB&I) released a list of 13 issues that it will target as part of a new examination strategy known as “campaigns”. The specific areas and issues targeted by the campaigns were identified through data analysis, recommendations of IRS employees, and feedback from tax practitioners.
The campaigns are the first step of LB&I developing a new overall audit strategy to be used for the examination of large business taxpayers. The IRS’ intent is to continue to develop and implement more issues-based audit campaigns in the future.
The campaigns will be administered using a variety of methods including issues-based examinations, correspondence with taxpayers and third parties, practitioner outreach programs, development of specialized practice units, and publication of technical guidance.
The initial 13 campaigns are:
- Internal Revenue Code (IRC) Section 48C energy credit
- Offshore Voluntary Disclosure Program (OVDP) declines-withdrawals program targeted at taxpayers who abuse the OVDP
- IRC Section 199 Domestic Production Activities Deduction (DPAD) for multi-channel video program distributors and television broadcasters
- Micro-captive insurance companies
- Related party transactions between commonly controlled business entities designed to transfer funds from a corporation to related pass-through entities or shareholders
- Deferred variable annuity reserves and life insurance reserves
- Basket transactions designed to treat ordinary income and short-term capital gain as long-term capital gain
- Residential land developers improperly using the Completed Contract Method (CCM) for long-term contracts
- TEFRA Partnership linkage plan strategy to identify and assess tax on “terminal investors” in partnerships
- Subchapter S Corporation losses claimed in excess of tax basis
- Repatriation strategies designed to bring foreign funds into the U.S. with little or no tax
- Foreign corporations doing business in the U.S. not meeting applicable tax filing requirements (Form 1120F)
- S. distributors of foreign goods
Specific details regarding the campaigns are available on the IRS website at the following link:
If you have any questions or require any additional information regarding these items, please contact your Whitley Penn LLP tax advisor.
Whitley Penn continues to be one of the region’s most distinguished public accounting firms. With a strong base in Texas and a worldwide network affiliation via Nexia International, the firm is strategically positioned for continued growth both locally and internationally. Whitley Penn has been consistently recognized as “One the Top 100 Firms in the U.S.” and “Best of the Best” by INSIDE Public Accounting. For more information on Whitley Penn, please visit whitleypenn.com.