TEI comments on draft research credit directives.

• Position: TECHNICAL SUBMISSIONS

TEI and other stakeholder groups recently met with representatives of the IRS' Large Business and International Division to review and offer comments on five draft research credit directives. Overall, the dialogue at the meeting was constructive, but the effort to involve stakeholders and obtain their insights could have been more productive. In its letter to LB&I, TEI offered observations on the process used to solicit stakeholder input, as well as the content of the draft directives.

On behalf of Tax Executives Institute, thank you for the opportunity to join with other stakeholder organizations on August 6, 2015, to review and offer comments on five draft research credit directives being considered for joint release by LB&I and the Small Business and Self Employed Division. (1) Over many years, TEI and the IRS have developed a strong and constructive working relationship that has enabled us to exchange views on issues of common interest and offer insights and feedback on key elements of various IRS examination programs. TEI has been an active participant and contributor to IRS initiatives involving Schedule M-3, the Quality Examination Process, the IDR re-design process, the role of partnerships and other pass-through entities in business operations, among many others. We are proud of our record of constructive engagement with the IRS and actively seek opportunities to engage with the agency on issues of common interest. It was in this spirit that we approached the invitation to comment on the draft research credit directives.

Overall, the dialogue at the August 6 meeting was constructive, broad-based, and wide-ranging. We respectfully believe, however, that the effort to involve stakeholders and obtain their insights could have been more productive, particularly in light of the importance of the research credit to the business community and the volume of time and resources spent by taxpayers, tax authorities, and tax advisors on research credit issues. Based on our attendance and participation, we offer the following observations on the process used to solicit stakeholder input and the content of the draft directives:

1. The process used to solicit stakeholder input was compressed and limited in scope. Stakeholders simply did not have enough time during the meeting to thoroughly review and reflect upon the five proposed directives. As a result, the feedback provided was incomplete. The limited stakeholder review represented a significant missed opportunity for LB&I...