|
...respond. first observation, from which most of my remaining ones follow, is that the IRS today is in a full compliance mode, largely because of the IRS's response to tax shelters over the last five years, led primarily by former Commissioner Mark Everson. The Large & Mid-Size Business Division, with which most large companies interact, is placing primary emphasis on perceived tax non-compliance by large and medium-size businesses. Congressional oversight panels have made it very clear to the IRS that more emphasis on tax compliance by business is expected. Accordingly, we are likely to see LMSB use techniques it developed to deal with tax shelters in the foreseeable future.
LMSB's new Industry Issue Focus program will target specific issues for development, audit, and potential litigation because LMSB will have determined that these issues have the greatest tax compliance risk for large and mid-size companies. The development of this new program suggests that if your company has a significant, potentially difficult tax issue that LMSB characterizes as a Tier I, Tier II, or Tier III issue, you are likely to encounter the same IRS audit problems, confusion, and frustration we often experienced over the last five years in dealing with LMSB's coordinated, matrix management system for tax shelter issues. Thus, you may find it difficult to determine who in LMSB and Chief Counsel has authority for what and who is willing and has the capability to make good decisions about your significant, potentially difficult tax issues. In such an environment, we expect the knowledge we developed in the tax shelter era about how and with whom to deal in LMSB's matrix management to secure taxpayer-favorable decisions will be important.
Even if your company was never involved in a tax shelter and does not encounter this new IIF program, IRS announcements over the last year suggest the likelihood of heightened LMSB audit scrutiny of such diverse but relatively routine activities as transfer pricing, cost sharing arrangements, domestic and international restructurings, R&D programs generating tax credits, derivatives, executive compensation and other section 409A programs, costs qualifying for the Domestic Production Deduction under section 199, and issues raised by Schedule M-3 or FIN 48 disclosures. Clearly, a major portion of LMSB's future focus will be on international issues. Because of the increasing cooperation among the federal, state, and foreign tax authorities, stakes will undeniably rise for multinational companies in the post-shelter tax controversy area. I predict that as the IRS gets more and more pressure from politicians and the media to collect taxes already owed to avoid having to raise tax rates for compliant taxpayers (especially individuals who vote), the business community will find dealing with LMSB and its attorneys more demanding and potentially difficult than in the past. Let me explain why.
In my experience, attorneys in the IRS Office of Chief Counsel are playing an increasingly important...
NOTE: All illustrations and photos
have been removed from this article.
More articles from Tax Executive
Multinationals and VAT compliance in the United Kingdom.(value-added t..., May 01, 2007
What does the future hold for at-cost services charges?, May 01, 2007
Competently negotiating the U.S. competent authority process., May 01, 2007
Getting up to speed on the final regulations for deferred compensation..., May 01, 2007
TEI comments on EU consultation paper on modernising VAT treatment of ..., May 01, 2007
Looking for additional articles?
Search our database of over 3 million articles.
Looking for more in-depth information on this industry?
Search our complete database of Industry & Market reports by text, subject, publication
name or publication date.
About Goliath
Whether you're looking for sales prospects, competitive information, company
analysis or best practices in managing your organization,
Goliath can help you meet your business needs.
Our extensive business information databases empower business
professionals with both the breadth and depth of credible,
authoritative information they need to support their business
goals. Whether it be strategic planning, sales prospecting,
company research or defining management best practices -
Goliath is your leading source for accurate information.
|
