Tuesday, February 2, 2021

LB&I Extends The Suspension of IDR Enforcement Through June 30, 2021

In a memo 
LB&I-04-1220-0021 (12/9/2020), the IRS's Large Business & International division (LB&I) has said it is extending the suspension of information document request (IDR) enforcement procedures through June 30, 2021 and all exam activities will continue under normal procedures (with some exceptions) through June 30, 2021.

On March 13, 2020, the President declared a national state of emergency due to the COVID-19 pandemic. (Emergency Declaration)

On March 25, 2020, the IRS announced that, as part of its People First Initiative, it was suspending all in-person contacts and some compliance actions through July 15, 2020. Specifically, the IRS announced that it would not start new field, office and correspondence examinations, unless a new examination was necessary to protect the government's interests. (IR 2020-59, see IRS suspends certain compliance programs due to COVID-19 (03/26/2020))

In March 2020, in response to IR 2020-59, LB&I said that IDR enforcement procedures would be suspended through July 15, 2020. (IRS memo: Approval for Deviation from IDR Process and Enforcement Control Number: LB&I-04-0320-0007 (3/25/2020))

In April 2020, LB&I clarified its compliance priorities for the period ending July 15, 2020. Generally, LB&I would not begin new return examinations before July 15, 2020. However, LB&I managers had the discretion to open an examination into prior year, subsequent year and related returns associated with an existing examination. See IRS Large Business & International division lists pre-July 15, 2020 priorities (04/21/2020).

In a new memo, LB&I says it is extending, in general, the suspension of IDR enforcement procedures through June 30, 2021.

However, for listed transactions (tax avoidance transactions identified by the IRS as listed transactions Reg §1.6011-4(b)(2)), examiners should follow the Servicewide summons procedures detailed in IRM 25.5.

In addition, in general, the LB&I exam activities will continue under normal procedures (with some exceptions) through June 30, 2021 "and thereafter." Exceptions to this rule are:

1. Appointments (whether in person or virtual) can be scheduled depending upon the facts and circumstances of the taxpayer. While in-person contact is allowed, IRS will continue to support performing our work virtually to accommodate our employees or taxpayers who may have concerns with in-person contact, which may require the need for statue extensions. Virtual appointments should continue to be conducted by WebEx or teleconference.

2. The hold on new Discriminate Analysis Score (DAS, a computer model the IRS uses to score examination potential for corporate returns with total assets of $10 million or more) cases will continue. IRS managers have discretion in approving prior, subsequent, and related returns associated with an existing DAS examination. 

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