IRS business valuers are in the Large Business and International (LB&I Division). In the first quarter of 2016 this division will be reorganized. It is being reorganized to emphasize campaigns on areas of non-compliance. As part of the process LB&I will be organized into four geographic areas with headquarters in New York, Chicago, Houston and Oakland. There will also be reorganization at the top of LB&I, but is unclear to me that this will have any meaningful impact on business valuers. This announcement provides additional information.
The IRS Large Business and International Division is undergoing sweeping changes designed to streamline enforcement and compliance, including a broad organizational change and a new risk identification and compliance program.
The changes, expected to be introduced in the first quarter of 2016, include an adjustment to LB&I's audit procedure, Douglas O'Donnell, LB&I commissioner, said September 17 at the annual financial services industry conference in New York, sponsored by the New York chapter of the Tax Executives Institute.
The shift is focused on creating "campaigns," which will use the knowledge of the entire organization to identify the greatest risks to tax administration and deploy IRS resources against them, O'Donnell said. "For the most part what we've been doing for many, many years is scoring a return and then asking our examiners to identify the issues on the return," he said. "We are trying to change the dynamic."
The details on the new audit procedure aren't sorted out, but Rosemary Sereti, director (financial services), LB&I, offered the offshore voluntary disclosure program as an example of ways the IRS has employed this type of risk identification and resource deployment that will be similar to the "campaign" program.
But campaigns are only part of a far-reaching change at LB&I.
Although not set in stone, LB&I will undergo a significant organizational change, replacing the two LB&I deputy commissioner positions -- international and domestic -- with a single deputy commissioner reporting directly to the LB&I commissioner. "We feel like in order to bring the organization together, trying to have one LB&I and everyone focused on all of our work, we are going to move to one deputy," O'Donnell said. "It is a recognition that we have a challenge in this space and we need to come together as a division to deal with the compliance challenges we have across our filing population and make sure that everybody can work together on these issues."
The position of assistant deputy commissioner (international) will continue to be the face of the IRS in dealing with treaty partners on broad issues while the advance pricing and mutual agreement program and treaty assistance and interpretation team will still handle individual cases. Theodore Setzer, LB&I acting assistant deputy commissioner (international), will remain acting in that position until a permanent selection is made.
To facilitate coordination of the campaigns, the assistant deputy commissioner of compliance integration position will be created to be responsible for ensuring that campaigns implemented are properly staffed and address those issues presenting the greatest compliance risk.
"We've previously had some internal bodies within the division to take looks at where we want to deploy resources; some instances have been more successful than others, but we are going to take the combined lessons from that to create a body that will help us make decisions that everyone will have an opportunity to weigh in on and debate and provide feedback, and make decisions about how we are going to operate and deploy our resources organizationally," O'Donnell said.
Reporting directly to the deputy commissioner will be nine practice areas tasked with studying compliance issues, suggesting campaigns to be included in the work plan, developing training and audit tools and other technical content, and providing support to the field. They include five subject matter practice areas: pass through entities; enterprise activities, including financial institutions and products, corporate issues, credits, and penalties; cross-border activities; withholding and international and individual compliance; and treaty and transfer pricing compliance.
There will be four compliance practice areas arranged by geography charged with conducting examinations and participating in identifying campaigns: Northeast, headquartered in New York City; Western, headquartered in Oakland, California; Central, headquartered in Houston; and Eastern, headquartered in Downers Grove, Illinois.
About the author
Mike Gregory is a professional speaker, an author, and a mediator. You may contact Mike directly at firstname.lastname@example.org and at (651) 633-5311. Mike has written 12 books (and co-authored two others) including his latest book, The Collaboration Effect: Overcoming Your Conflicts, and The Servant Manager, Business Valuations and the IRS, and Peaceful Resolutions that you may find helpful. [Michael Gregory, ASA, CVA, NSA, MBA, Qualified Mediator with the Minnesota Supreme Court]