Daily Tax Update - May 31, 2016: OECD Issues Discussion Draft on Development of Multilateral Instrument

OECD Issues Discussion Draft on Development of Multilateral Instrument:  Today, the Organization for Economic Cooperation and Development (OECD) issued a discussion draft that requests input on certain technical issues related to the development of a multilateral instrument to implement the tax-treaty related base erosion and profit shifting (BEPS) measures.  In particular, comments are requested on the following topics: (1) technical issues that should be taken into account in adapting the BEPS measures to modify or supersede existing provisions of bilateral tax treaties that may vary from the OECD model; (2) the approach to be taken in developing the optional provision on mutual agreement procedure (MAP) arbitration; (3) the types of guidance and practical tools that would be most useful to taxpayers in understanding the application of the multilateral instrument to existing tax treaties; and (4) mechanics that could be used to ensure consistent application and interpretation of the provisions of the multilateral instrument.  Comments should be submitted no later than June 30.

IRS to Initiate Audits Only by Mail:  An internal IRS memorandum, dated May 20, states that, effective immediately, all initial contacts with taxpayers to commence an examination must be made by mail, instead of by telephone.  “In response to the continuing threat of phone scams, phishing, and identity theft,” the memorandum changes a “long-standing policy” in certain examination operations of initially contacting taxpayers by telephone to schedule an appointment.  The memorandum is addressed to each division of the IRS.  The IRS is also evaluating other contacts with taxpayers, outside of the examination context, to determine whether they present risks with respect to phone scams and other such threats.