LB&I directive - IRS enforcement process when taxpayers do not comply with IDRs 

November 4:  The IRS Large Business and International (LB&I) division today posted an LB&I directive setting forth a new, more stringent enforcement process when taxpayers do not timely comply with information document requests (IDRs) or do not provide complete responses to an IDR by the response date. LB&I-04-1113-009 (November 4, 2013)

The LB&I directive is effective January 2, 2014, but a transition rule will apply. Read more about the effective date below.

IDR enforcement process

Today’s LB&I directive (affecting IRM 4.46.4) provides three "graduated steps" in the IDR enforcement process:


  • A delinquency notice
  • A pre-summons letter
  • A summons

The LB&I directive states that this three-step enforcement process is mandatory and that there are no exceptions.


LB&I managers—at all levels—are to be actively involved early in the IDR process and must determine that IRS Counsel is prepared to enforce IDRs through the issuance of a summons, if necessary.


In addition, today’s LB&I directive reiterates guidance contained in a June 2013 directive for examiners to follow in issuing an IDR during the information gathering process of an examination. Read TaxNewsFlash-United States: LB&I directive - Information document requests.

Attachments

Included in today’s directive are two attachments:


  • Attachment 1 containing requirements for LB&I examiners to follow in issuing IDRs
  • Attachment 2 setting forth the enforcement process for the LB&I examiners to follow when taxpayers do not provide complete responses to an IDR by the response date

Effective date - Transition rules, taxpayer notifications

Today’s LB&I directive states that the IDR enforcement process is effective beginning January 2, 2014.


As of January 2, 2014, the process will apply only to IDRs that have been issued in accordance with the requirements contained in Attachment 1. The LB&I directive state that if an IDR does not meet these requirements, it must be reissued to conform to the new requirements including a new response date, at which time the enforcement procedures described in Attachment 2 will apply to that IDR.


In addition, to allow for a smooth transition to these new enforcement procedures, LB&I examiners are directed not to issue delinquency notices prior to February 3, 2014.


As of today—


  • All LB&I managers, examiners, and specialists are instructed to make sure that all outstanding and future IDRs comply with the new requirements for issuing IDRs.
  • IRS teams are directed to discuss with taxpayers currently under examination the new requirements related to both the issuance and the enforcement of IDRs, with such discussions to take place as soon as practical, but generally no later than December 15, 2013.



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