Douglas O'Donnell, commissioner of the IRS Large Business and International (LB&I) division, announced on Sept. 17 that the LB&I division will undergo significant changes designed to streamline enforcement and compliance.
While the IRS has not released official guidance on the changes, several senior LB&I officials have offered remarks publicly on the restructuring. Changes include a consolidation of the current deputy commissioners' positions (international and domestic) into a single deputy commissioner, with the creation of an assistant deputy commissioner for compliance integration.
In addition, the restructured LB&I division will focus on a new audit procedure that has been referred to publicly as "campaigns," whereby the IRS will identify specific risks to tax administration and deploy resources accordingly. One senior IRS official indicated that the current Offshore Voluntary Disclosure Program is similar to the approach that will be undertaken by the campaigns.
The IRS also anticipates creating nine practice areas that will explore compliance issues and suggest campaigns. Of these practice areas, five will deal with subject matter: (1) pass-through entities; (2) enterprise activities, such as financial institutions and products, corporate issues, credits and penalties; (3) cross-border activities; (4) withholding, and international and individual compliance; and (5) treaty and transfer pricing compliance. There is expected to be four compliance practice areas, organized by geography.
The LB&I division has jurisdiction over business taxpayers with more than $10 million in assets, as well as certain global high wealth individuals and taxpayers with international compliance issues. The anticipated changes have not yet been introduced in written guidance and are subject to change.
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