A closer look.
IRS Insights, published by the Deloitte Tax LLP Tax Controversy Services group, provides a compact, reader-friendly perspective on the latest practices and procedures coming out of the Internal Revenue Service (IRS), as well as the potential impact of changes on taxpayers.
- LB&I Issues Updated Examination Process: On February 25, 2016, the Large Business & International (LB&I) Division of the IRS released Publication 5125, the LB&I Examination Process. This publication replaces Publication 4837, the Quality Examination Process, and goes into effect on May 1, 2016.
- IRS Releases Fiscal Year 2015 Enforcement Statistics: On February 22, 2016, the IRS released the Fiscal Year 2015 Enforcement and Service Results. These statistics provide insight into current IRS operations in the enforcement, examination, collection and taxpayer service areas.
- The Seventh Circuit Holds Second Inspection of Prior Year Records was not Barred When Relevant to Year under Examination: In United States v. Titan International, Inc., 2016 US App. LEXIS 1687 (7th Cir. 2016), the Seventh Circuit Court of Appeals held that an inspection of a prior year books and records was not barred, despite a previous examination, as it was necessary for the IRS to inspect the books and records to evaluate the year under examination.
- PATH Act Makes Amendments to Sections 6664 and 6676 and IRS Issues Corresponding Advice: The PATH Act amended the definition of “underpayment” under section 6664, which is used to calculate the accuracy-related penalty under section 6662 and the fraud penalty under section 6663. The PATH Act also changed the defense to the erroneous claim for refund or credit penalty under section 6676 from reasonable basis to reasonable cause. In response to these amendments, the IRS issued a Chief Counsel Notice and a Chief Counsel Advice addressing the effect of the changes.
- Financial Crimes Enforcement Network Issues Proposed Regulations to Modify Certain FBAR Filing Requirements: On March 1, 2016, the Financial Crimes Enforcement Network issued a Notice of Proposed Rulemaking to revise and clarify certain provisions of the requirements for Reports of Foreign Bank and Financial Accounts.
Changes Made to Partnership Audits and Adjustments
Tax Court Invalidates Transfer Pricing Regulations, Finding That They Did Not Satisfy the Reasoned Decisionmaking Standard under “State Farm”
The Federal Circuit Affirms a Court of Federal Claims Decision Dismissing Foreign Tax Credit Refund Claims as Untimely
A District Court Holds IRS’s Assessment of a Reportable Transaction Penalty was Untimely under Section 6501(c)(10) as IRS Had Been Furnished the Required Information More Than One Year before Assessment
The Tax Court Holds that Raising the Reasonable Cause and Good Faith Defense to the Accuracy-Related Penalty May Cause a Waiver of Privilege