The IRS Large Business and International division (LB&I) announces the approval of six additional compliance campaigns (July 19, 2019).

To date, LB&I has announced a total of 59 campaigns.

The campaigns described below were identified through LB&I data analysis and suggestions from IRS employees. LB&I’s goal is to improve return selection, identify issues representing a risk of non-compliance, and make the greatest use of limited resources. The new campaigns are:

  • S Corporations Built in Gains Tax

Practice Area: Pass Through Entities

Lead Executive: Holly Paz, director of Pass Through Entities

C corporations that convert to S corporations are subjected to the Built-in Gains tax (BIG) if they have a net unrealized built-in gain and sell assets within 5 years after the conversion. This tax is assessed to the S corporation. LB&I has found that S corporations are not always paying this tax when they sell the C corporation assets after the conversion. LB&I has developed comprehensive technical content for this campaign that will aid revenue agents as they examine the issue. The goal of this campaign is to increase awareness and compliance with the law as supported by several court decisions. Treatment streams for this campaign will be issue-based examinations, soft letters, and outreach to practitioners.

  • Post OVDP Compliance

Practice Area: Withholding & International Individual Compliance

Lead Executive: John Cardone, director of Withholding & International Individual Compliance

U.S. persons are subject to tax on worldwide income. This campaign addresses tax noncompliance related to former Offshore Voluntary Disclosure Program (OVDP) taxpayers’ failure to remain compliant with their foreign income and asset reporting requirements. The IRS will address tax noncompliance through soft letters and examinations.

  • Expatriation

Practice Area: Withholding & International Individual Compliance

Lead Executive: John Cardone, director of Withholding & International Individual Compliance

U.S. citizens and long-term residents (lawful permanent residents in eight out of the last 15 taxable years) who expatriated on or after June 17, 2008, may not have met their filing requirements or tax obligations. The Internal Revenue Service will address noncompliance through a variety of treatment streams, including outreach, soft letters, and examination.

  • High Income Non-filer

Practice Area: Withholding & International Individual Compliance

Lead Executive: John Cardone, director of Withholding & International Individual Compliance

U.S. citizens and resident aliens are subject to tax on worldwide income. This is true whether or not taxpayers receive a Form W-2 Wage and Tax Statement, a Form 1099 (Information Return) or its foreign equivalents. Through an examination treatment stream, this campaign will concentrate on bringing into compliance those taxpayers who have not filed tax returns.

  • U.S. Territories – Erroneous Refundable Credits

Practice Area: Withholding & International Individual Compliance

Lead Executive: John Cardone, director of Withholding & International Individual Compliance

Some bona fide residents of U.S. territories are erroneously claiming refundable tax credits on Form 1040, U.S. Individual Income Tax Return. This campaign will address noncompliance through a variety of treatment streams including outreach and traditional examinations.

  • Section 457A Deferred Compensation Attributable to Services Performed before January 1, 2009

Practice Area: Northeastern Compliance Practice Area

Lead Executive: Barbara Harris, director of Northeastern Compliance

This campaign addresses compensation deferred from nonqualified entities attributable to services performed before January 1, 2009. In general, Internal Revenue Code (IRC) Section 457A requires that any compensation deferred under a nonqualified deferred compensation plan shall be includible in gross income when there is no substantial risk of forfeiture of the rights to such compensation. The campaign objective is to verify taxpayer compliance with the requirements of IRC Section 457A through issue-based examinations.

Posted by Lewis J. Saret, Co-General Editor, Wealth Strategies Journal..

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