Daily Tax Update - August 17, 2012: IRS Replacing Tiered Issue Audit Process with Specialized Issued Practice Groups

August 17, 2012

IRS REPLACING TIERED ISSUE AUDIT PROCESS WITH SPECIALIZED ISSUED PRACTICE GROUPS: In an IRS directive issued today, the IRS said that it is replacing the tiered issue process it uses to prioritize audit resources with an approach employing specialized issue practice groups for domestic examinations and international practice networks for global audits.

  • IRS Large Business & International Division (LB&I) Commissioner Heather Maloy said, "Today’s directive provides that all Tier I, II and III issues are no longer tiered. Instead, these issues should be risk-assessed and examined in the same manner as any other issue in an audit. References to tiered issues in other IRS Administrative Guidance, such as the IRM, Coordinated Issue Papers, or Industry Guides, are no longer valid. LB&I will review and update all impacted Administrative Guidance over the coming months."
  • The directive states, "In place of the Tiered Issue Process, LB&I is developing a knowledge management network (currently being piloted) through the use of Issue Practice Groups ("IPGs") for domestic issues and International Practice Networks ("IPNs") for international issues. IPGs and IPNs are designed to provide examination teams the technical advice they need to manage their cases efficiently, consistently and with a high degree of technical proficiency. IPGs and IPNs are designed to foster effective collaboration and the sharing of knowledge and expertise across LB&I and Chief Counsel. LB&I views the IPGs and IPNs as a better mechanism than the Tiered Issue Process for balancing the need for consistency with the recognition that there is no 'one size fits all' approach to examining and resolving issues." 
  • For additional information, contact Philip R. West - pwest@steptoe.com  or Matthew D. Lerner - mlerner@steptoe.com
  • The directive can be accessed here.

IRAQ ADDED TO TREASURY’S LIST OF BOYCOTTING COUNTRIES:  The Department of the Treasury has added Iraq to the "List of Countries Requiring Cooperation With an International Boycott." The previous notice published in February had stated that "Iraq is not included in his list, but its status with respect to future lists remains under review by the Department of the Treasury."

MISCELLANEOUS GUIDANCE RELEASED:

Notice 2012-55 provides guidance on the 25-year average segment rates that are applied to adjust the otherwise applicable 24-month average segment rates that are used to compute the funding target and other items under § 430 of the Internal Revenue Code (Code) and § 303 of the Employee Retirement Income Security Act of 1974 (ERISA).  The guidance reflects the changes made to the Code and ERISA by the Moving Ahead for Progress in the 21st Century Act (MAP-21), Pub. L. No.112-141.

INTERNAL REVENUE SERVICE - CIRCULAR 230 DISCLOSURE: 
As provided for in Treasury regulations, advice (if any) relating to federal taxes that is contained in this communication (including attachments) is not intended or written to be used, and cannot be used, for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any plan or arrangement addressed herein.

STEPTOE & JOHNSON LLP - TAX PRACTICE 
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