Making focused use of diminishing resources, the Internal Revenue Service (IRS) recently announced five additional compliance targets.
In 2017, the Large Business and International Division (LB&I) of the IRS began announcing specific projects or campaigns of interest to the division. While the process for selection of the campaigns is not clear, creating specific campaigns helps the agency make focused use of its resources.
In its 2018 Annual Report, the Criminal Investigation Division reported on its planned integration of data collection and analysis to drive its enforcement and compliance efforts. The LB&I division actively uses data collection and analytics to boost its performance and improve its selection of target areas.
To that end, the LB&I added five additional campaigns to its expanding campaign list in late October of this year. While some of the campaigns are clearly aimed at enforcement, others are intended to build awareness of compliance issues. Instead of notice of a civil tax audit, the agency may send out an alert letter to a taxpayer or tax preparer.
- Work opportunity tax credit: The division will collaborate with industry stakeholders to deal with delays and problems experienced by taxpayers seeking to claim the Work Opportunity Tax Credit (WOTC).
- FATCA filing accuracy: The purpose of the Foreign Account Tax Compliance Act (FATCA) is to discourage tax abuse by requiring foreign interests and financial institutions to report assets held by US taxpayers. This new campaign addresses financial entities that have FATCA responsibilities but that do not meet reporting requirements.
- Delinquent returns campaign: This campaign will concentrate on foreign entities that do not file the required Form 1120-F, the US Income Tax Return of a Foreign Corporation, on a timely basis.
- Offshore service providers: This campaign will use issue-based examinations to address US taxpayers who use foreign entities and service providers to conceal their ownership of foreign bank accounts for purposes of tax fraud or evasion.
- Individual foreign tax credit: This audit topic is a compliance effort aimed at individuals who have claimed a foreign tax credit but who do not meet the requirements for the credit. The IRS notes it will pursue a “variety of treatment streams, including examination.”
Only the latest, not the last, these campaigns impact a wide swath of persons and businesses that pay US taxes. Speak with an experienced tax lawyer when you have questions about these compliance projects or receive notice of an IRS criminal investigation.
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