New mandatory IDR enforcement procedures for LB&I examinations.

• Author: Almeras, Jon
• Position: Information document requests, IRS Large Business and International Division

The IRS's Large Business and International Division (LB&I) has recently focused on implementing significant changes to irs in formation-gathering process by changing procedures for information document requests (IDRs). On Nov. 4. LB&I released the internal directive LB& 1-04-1113-009 (the November directive), which provides guidance on the new IDR enforcement process that was effective Jan. 2,2014. The November directive supplements the earlier LB&I guidance issued on June 18 (LB&I-04-06I3-004, the June directive), which announced a new IDR drafting policy.

Taxpayers should be aware that all LB&I examinations are to be conducted in accordance with the policies in these directives.

The June Directive

The June directive announced LB&L's new policy for IDRs issued after June 30, 2013. The stated purpose of the new policy is to increase the efficiency of the IDR process by ultimately decreasing the need to use summonses to gather information during an examination. The June directive instructs LB&I examiners and specialists to follow the IDR practices, as set forth in the directive, when gathering information during an examination. Specifically, it requires LB&J examiners to ( 1 ) draft issue-focused IDRs, wherein the examiner must identify and state the issue that has led the examiner to request the information included in the IDR; (2) discuss the underlying issue and content with the taxpayer before issuance; and (3) discuss with the taxpayer the appropriate deadline for responding to the IDR.

The policies set forth in the June directive apply to all IDRs issued after June 30, 2013. Furthermore, existing IDR memorandums of understanding between the IRS and a taxpayer that do not comply with the principles of the June directive were no longer effective. Finally, the directive stated that changes to the IDR enforcement process would be forthcoming once the IRS had implemented new policies for issuing IDRs. To ensure compliance with the June directive, all LB&I examiners and specialists were required to attend mandatory training intended to reinforce best practices for information gathering.

The November Directive

The November directive contains the enforcement process referenced in the June directive. The enforcement process requires LB&I examiners and specialists to follow a three-step process once an IDR response is determined to be delinquent. LB&I examiners must:

1. Issue a delinquency notice that provides the taxpayer a specified period in...