The IRS Large Business & International (LB&I) Division updated a prior directive concerning information document requests (IDRs) to include an exception to the general requirement that individual IDRs state a specific issue.
The updated directive (LB&I-04-0214-004), issued Feb. 28, also delays the effective date for enforcement of IDRs to April 3. The directive states that examiners may not issue delinquency notices prior to that date.
New IDRs issued by the LB&I Division are supposed to be narrowly tailored, focusing on a single issue. However, the latest directive states that there is an exception to that provision for basic books and records and general information about a taxpayer's business. Those general IDRs, known as "IDR One" may not be as issue-specific as newly issued IDRs are intended to be.
The new IDR process has been in the works for some time, and was formally announced in a Nov. 4, 2013, directive (LB&I-04-1113-009). The procedures were originally scheduled to go into effect on Jan. 2, with the first delinquency notices issued on or after Feb. 3. The procedures would provide rigid rules relating to late responses to an IDR that would result in escalating actions, including a delinquency notice, a pre-summons letter and eventually a summons.
However, the proposed new procedures have been subject to criticism. In February, responding to concerns from taxpayers and the National Treasury Employees Union, the IRS delayed the start date of the procedures until March 3, promising to clarify and revise the procedures. Under the current directive, the new IDR process became effective on March 3, but the IRS will not issue any delinquency notices before April 3.
Importantly, the updated directive provides that if a taxpayer fails to adequately or in a timely way respond to an IDR, the examiner should discuss with the taxpayer the reasons for failure, within five business days of the IDR due date. During that discussion, if the examiner determines that an extension of time is warranted, the examiner may grant an extension of up to 15 business days for the taxpayer to comply. If the taxpayer still fails to respond adequately or on time, then the mandatory enforcement procedures begin.
If the taxpayer's response is adequate, the examiner is expected to inform the taxpayer that the IDR is complete and closed. If additional information is required by the IRS, and the taxpayer has complied, the examiner is expected to process that information within 15 business days of receipt, and then notify the taxpayer of the IDR's status.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
