LB&I launches 13 initial campaigns.

AuthorMike Dolan, J.D.
PositionIRS Large Business and International Division

In recent years the IRS has faced a number of challenges that stem at least in part from shrinking budgets. While a variety of factors have contributed to the decreases in funds appropriated for the IRS, it has been obvious to the Service as well as to its "customers" that fundamental change was required. To his credit, rather than just employing the classic bromide to do more with less, IRS Commissioner John Koskinen challenged the four IRS operating divisions to design a future state that involved changes that will improve overall effectiveness within a context of continuing constrained budgets.

The Large Business and International (LB&I) division is currendy in the middle of rolling out a major component of its future state. In February of this year, LB&I announced that as part of its redefined approach, it would undertake 13 compliance "campaigns." Those campaigns are now underway, and they reflect a change in the way the IRS intends to influence the compliance behaviors of the roughly 250,000 largest entities that constitute LB&I's segment of the taxpayer universe.

Historically, LB&I has devoted the majority of its resources to examining the largest corporations. As an aside, despite the fact that passthrough entities made up significandy more than half the LB&I constituent population, a disproportionate emphasis has been placed on large corporations. The large taxpayer examination activity typically took place within what commonly is described as the large case program--most recently defined as the Coordinated Industry Case (CIC) program. The returns of CIC taxpayers are centrally scored and selected for examination and then assigned to a local team of IRS personnel who determine the specific issues to be examined. Local examination teams have broad discretion to choose the issues that they will examine. Because of the historical priority assigned to CIC taxpayers, LB&I has very limited visibility into the extensive non-CIC portion of its constituency--sometimes called the "middle market."

A focus on issue rather than enterprise

At its heart, the campaign approach seeks to shift LB&I from focusing on relatively few large corporations to focusing on more precisely identified compliance risks throughout the entire LB&I population. Under LB&I's plan, a campaign will start with a centrally identified "risk-issue" that will be addressed by one or more "treatments." According to the IRS, these treatments will include a range of actions. On...

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