The Internal Revenue Service is realigning its Large and Mid-size Business Division to focus more on improving international tax compliance.

As part of the organizational shift, the name of the IRS’s large corporate unit — LMSB — will change on Oct. 1 to the Large Business and International Division, or LB&I.

“Executing our international strategy is a top priority, and our work continues to intensify in this area,” said IRS Commissioner Doug Shulman in a statement. “Every day, we are moving forward in our international compliance efforts. Bringing together our top international personnel in this new group will help us advance our global tax administration efforts and ensure focus and fairness in a critical area for our nation.”

The new LB&I organization will enhance the current International program, adding about 875 employees to the existing staff of nearly 600. Most of the additional examiners, economists and technical staff are current employees who specialize on international issues within other parts of LMSB.

The realignment is aimed at strengthening international tax compliance for individuals and corporations in several ways, including identifying emerging international compliance issues more quickly. The IRS also believes the realignment will help remove geographic barriers and allow for the dedication of IRS experts to the most pressing international issues.

The IRS also hopes to increase the international specialization among its staff members by creating economies of scale and improving IRS international coordination, ensuring the right compliance resources are allocated to the right cases.

In addition, the IRS plans to consolidate oversight of international information reporting and implementing new programs, such as the Foreign Account Tax Compliance Act. The agency intends to coordinate its “Competent Authority” staff more closely with field staff members who originate cases, especially those dealing with transfer pricing. The IRS also plans to centralize and enhance its focus on transfer pricing in other ways.

The new international unit will include a transfer pricing director, who will continue piloting the new transfer pricing practice, and a chief economist, who will oversee the IRS’s economic positions pertaining to transfer pricing.

Heather C. Maloy will continue serving as the commissioner of the LB&I Division. Michael Danilack, the deputy international commissioner, will head the realigned global unit. Paul D. DeNard will continue serving as deputy commissioner of operations.

“The realigned organization will let us focus on high-risk international compliance issues and handle these cases with greater consistency and efficiency as we continue to increase our work in this area,” Shulman said.

In addition, the realigned LB&I will continue to serve the same population of taxpayers — corporations, subchapter S corporations and partnerships with assets greater than $10 million, as well as certain high wealth individuals. 

The realignment marks the latest in a number of efforts the IRS has made to increase international tax compliance. The IRS has taken major steps to address offshore tax evasion, including the investigation of the misuse of undisclosed offshore accounts by U.S. taxpayers. Last fall, the IRS created a global high wealth industry unit to better monitor tax compliance by high-income individuals and their related enterprises.

LB&I is also charged with overseeing the implementation of the recently enacted Foreign Account Tax Compliance Act. Signed into law in March, FATCA will substantially improve international information reporting, increasing international transparency and compliance.

The IRS and the Department of Treasury have also worked to revise tax treaties and tax information exchange agreements to increase transparency and to make it more difficult for taxpayers to evade taxes just by crossing international borders.

Register or login for access to this item and much more

All Accounting Today content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access