IRS to perform mandatory audits of foreign earnings repatriation.

• Author: Sherr, Eileen
• Position: News Notes

The IRS Large and Mid-Size Business Division (LMSB) has identified foreign earnings repatriation as a tier 1 compliance issue, making it a mandatory examination item for those U.S. taxpayers selected for audit that have elected to repatriate foreign earnings under Sec. 965.

The Service issued an industry directive, providing guidelines to IRS field agents for planning and completing an examination of U.S. companies that have made the election under Sec. 965 to repatriate earnings from their controlled foreign corporations (CFCs) at n reduced rate (see Industry Directive #1 on Section 965

Foreign Earnings Repatriation--IDR Questions, available at www.irs.gov/businesses/article/0,,id=175606,00.html).

The LMSB also issued a memorandum on the subject for IRS industry directors (LMSB-04-0907-063, Tier I Issue--Section 965 Foreign Earnings Repatriation Directive #1, available at www.irs.gov/pub/irs-utl/idd965final.pdf).

At a minimum, the IRS plans to use the following audit techniques an each case that involves a Sec. 965 foreign earnings repatriation issue:

* Review Form 8895, One-lime...