The Internal Revenue Service has released a new guide for auditors in its Large Business and International division outlining a new examination process for big businesses.
Publication 5125, the LB&I Examination Process, was posted online last week and will take effect May 1, 2016. The publication outlines a new process for conducting examinations, beginning with the first contact with corporate taxpayers through the final stages of issue resolution.
The IRS developed the new process after receiving extensive input from the LB&I workforce and external stakeholders. It establishes roles and responsibilities for both LB&I examiners and taxpayers and sets specific expectations with respect to claims for refund.
Examiners are expected to work transparently and collaboratively with taxpayers to understand their business and share the issues that have been identified for examination. The publication encourages taxpayers and their representatives to work with examiners to provide an overview of business activities, operational structure, accounting systems and a global tax organizational chart. They are expected to work together to develop audit steps, timelines and provide appropriate personnel to actively assist with the issues identified in the examination.
The IRS acknowledged, however, that not all examinations are the same in scope, size and complexity. Therefore, portions of the publication may be more applicable to some cases than others.
The new guide will replace Publication 4837, Achieving Quality Examinations through Effective Planning, Execution and Resolution, for cases starting as of May 1, 2016.