Overview of Today s Discussion

Transcription

1 International Fiscal Association USA Branch New York Region Fall Seminar Thursday, December 18, 2014 What s Happening in LB&I Audits of International Issues Moderator: Diana Wollman Panelists: Nancy Chassman AIG Tim Mulvey Deutsche Bank Sharon Katz-Pearlman KPMG Frank Ng EY Overview of Today s Discussion New Exam procedures New (draft) examination rules: Publication 5125 New IDR procedures New Appeals approach and procedures AJAC: quasi-judicial approach project New Post-Appeals Mediation Rev. Proc. Information Gathering with Other Countries Treaty requests for information The New JITSIC Other OECD Information Sharing Developments 2

2 First Discussion Topic New Exam procedures New (draft) examination rules: Publication 5125 New IDR procedures 3 New Publication 5125: what is it? LB&I Examination Process Draft released by LB&I Nov 2014 Goals: efficiency and effectiveness through cooperation, transparency and responsiveness use less resources and resolve issues sooner and at a lower level Emphasizes that the exam should be issuebased 4

3 Pub 5125 s new approach to refund claims Informal claims accepted only during first 30 days after opening conference After that, must use Form 1120X or Form 843, with supporting documentation All claims must include: Detailed explanation of grounds for claim and relevant facts; and perjury statement Such that claim may be evaluated without any IDRs 5 Pub 5125 s impact on disclosures? Rev Proc 94-69: CIC TP s may provide LB&I examiner with a written disclosure statement of changes to return positions treated as a Qualified Amended Return for purposes of avoiding 6662 penalties Does 5125 change this? 6

4 Pub 5125 s new approach to working issues In an unagreed case, the taxpayer has the primary responsibility to ensure all the facts and legal arguments are provided during the examination process so that the case is ready for Appeals consideration. LB&I responsible for documenting the facts and obtaining TP s written acknowledgement LB&I should use all tools available to resolve issues at the lowest possible level 7 Pub 5125 s approach to Issue Resolution Fast Track Settlement must be considered for all unagreed issues. Also encourages use of other appropriate issue resolution tools. Fast Track has been around since 2003 Compare to Quality Examination Process Reference Guide (2010): Issue resolution tools, such as Fast Track, early referrals to Appeals, etc., will be considered for all unagreed issues as soon as possible in the examination. 8

5 New IDR Procedures: what is it? 3 LB&I Directives (June 2013-Feb 2014) Effective March 2014 Goals: transparency, cooperation & communication, consistency, and discipline 9 New IDR Procedures new rules IDRs must be issue-focused one issue per IDR LB&I and TP must discuss IDR and response time prior to IDR being issued TP must respond by agreed due date If not, series of enforcements steps commences (e.g., conversation, delinquency notice, summons) firm time frames for these enforcement steps 10

6 Second Discussion Topic New Appeals approach and procedures AJAC: quasi-judicial approach project New Post-Appeals Mediation Rev. Proc AJAC: what is it? Appeals Judicial Approach&Culture Project Phase I: July 2013 Phase II: July 2014 Goal: enhance internal and external perceptions that Appeals is fair, impartial and independent do so by ensuring that agents fully develop cases before going to Appeals Appeals resolves disagreements identified by the parties does not investigate facts or develop issues 12

7 Changes made by AJAC: new issues Appeals will not raise new issues or reopen agreed issues Appeals may raise new argument/theory argument/theory that supports a position already being espoused by LB&I or TP If TP raises new issue case will be sent back to LB&I If TP raises new theory/argument, Appeals will share with LB&I for review and comment 13 Changes made by AJAC: new facts Appeals should not seek out new facts If case is not fully developed, Appeals should settle based upon factual hazards Appeals should not send back If TP provides new facts will be sent back to LB&I (or sent to LB&I for review and comment) Appeals will not perform analysis or examine facts 14

8 Changes Made by AJAC: SOL rules Must have 365 days remaining on SOL when case arrives at Appeals Reason: so that Appeals is not engaging with TP to request SOL extension erodes independence 180 days needed for cases returning to Appeals after being sent back to LB&I 15 Post-Appeals Mediation: Rev Proc First available in 1995 on limited basis slowly expanded on pilot-basis until made permanent in 2002 Available for legal and factual issues that remain unresolved after the end of normal Appeals settlement discussions Mediating parties are Appeals and TP Both parties must agree to mediation Mediator is an Appeals officer TP can add a non-irs co-mediator 16

9 Third Discussion Topic Information Gathering with Other Countries Treaty requests for information The New JITSIC Other OECD Information Sharing Developments 17 Treaty Requests for Information IRS shares information with treaty partners pursuant to income tax treaties and tax information exchange agreements (TIEAs) Types of info sharing: automatic exchanges, spontaneous exchanges, and specific requests from treaty partners 18

10 Treaty Requests for Information In response to request from treaty partner, IRS can share info IRS already has no obligation to tell TP issue an IDR to the TP (does IDR procedure apply to such an IDR?) issue a summons to a third-party (e.g., a bank) by statute, TP must be notified 19 Information Sharing Through JITSIC The old JITSIC Joint International Tax Shelter Information Centre 7 countries plus 2 observers Oct. 2014: Forum on Tax Administration announces the formation of the new JITSIC Joint International Tax Shelter Information and Collaboration Network open to all 38 FTA member countries systematic and enhanced cooperation, based upon existing legal instruments 20

11 Other OECD Info Sharing Developments Forum on Tax Administration s Oct Communique In addition to the new JITSIC, addresses a number of other information sharing and cooperation matters 21 Other OECD Info Sharing Developments Convention on Mutual Administrative Assistance in Tax Matters (the MAC ) 1998 plus 2010 Protocol U.S. has signed, but not ratified Jt. Comm. Explanation: JCX 9-14 (Feb. 2014) Calls for extensive information sharing, including spontaneous BEPs CbC reporting 22