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New IDR Enforcement Process Announced
Last summer, the IRS listed new guidelines for Large Business & International (LB&I) examiners and specialists to follow related to Information Document Requests (IDRs) for LB&I companies under IRS examination. Any corporation, subchapter S corporation or partnership will be subject to the LB&I guidelines if their assets are greater than $10 million.
Earlier this month, the IRS issued a directive which provides guidance on the new IDR enforcement process that will be effective January 2, 2014. The main focus of the new process is to clearly identify and state the issue that has led to the IRS examination of the LB&I company. As addressed in the guidance, the examiner must discuss the IDR with the taxpayer in advance of issuing the IDR, as well as determining and discussing with the taxpayer, a reasonable timeframe as to when a response to the IDR is adequate.
The guidance also set forth the process which will be used when a taxpayer does not respond in a timely manner to the IDR. If a LB&I company does not respond to an IDR, the examiner is required to enforce the IDR in three graduated steps: 1) a Delinquency Notice; 2) a Pre-Summons Letter; and 3) a Summons.
The new IDR enforcement process related to LB&I companies are believed to result in a more efficient and transparent examination, reducing the need to enforce summonses.
Again, the new process will be effective January 2, 2014. Any LB&I taxpayer that is currently under examination should have the guidance communicated to them by December 15, 2013.
For more information or questions on this topic, please contact your local UHY LLP professional.