TEI-LMSB liaison meeting.

March 10, 2010

Agenda

On March 10, 2010, Tax Executives Institute held its annual liaison meeting with the IRS's Large and Midsize Business Division. The agenda for the meeting is reprinted below. Minutes of the meeting will be published in a subsequent issue.

Welcome and Introduction

LMSB 2010 Priorities

Announcement 2010-9

Announcement 2010-9 represents the latest step in the IRS's continuing effort better identify transactions and areas of risk that should be the focus of its examination resources. In line with Forms 8275, M-3, and 8886, it is designed to assist the IRS expend its resources examining--rather than searching for--transactions. TEI is in the process of preparing written comments on Announcement 2010-9, but we welcome the opportunity to discuss the Announcement and in particular, the following:

Effective date

* Materiality threshold

* Unknowable amounts--valuations, transfer prices, etc.

* Permanent v. Temporary Differences

* Current year v. cumulative

Examination-Related Matters

1. Industry Issue Focus Strategy (Tiering). The industry issue focus strategy (more commonly known as tiering) has been in place for almost three years; its stated objective has been to try and achieve consistent treatment in the development and resolution of strategically important issues. Recent examples of issues that have been designated as Tier I issues include Total Return Swaps, Research Credit Claims, Repairs, and Withholding Taxes.

   As the program approaches its three year-anniversary, what is the IRS's overall assessment of the IIF/Tiering program, in particular, its effect on audit currency, issue resolution and case closure, especially in respect of CIC and CAP taxpayers? What improvements are being contemplated to further enhance the program?

2. Partnerships and Pass-Through Entities Examinations. The number of pass-through returns (Subchapter S and Partnership) being filed continues to rise. Recent FY09 data indicate that more than three million partnership returns and more than four million Subchapter S returns were filed with the IRS. LMSB Commissioner Maloy has recently commented that the LMSB has moved audit resources in the direction of passthroughs and will continue to do so in 2010. What are the scope and direction of the IRS's renewed enforcement efforts in this area?

3. International Examination Program Update. International tax compliance matters occupy an ever-increasing piece of the overall LMSB agenda. Recently, the IRS...