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For Large Taxpayers, Much of the IRS’s Work Continues

Posted on Apr. 23, 2020

The IRS’s compliance and exam work is proceeding much as usual for large taxpayers in the wake of the coronavirus, which is what many taxpayers want, according to some IRS officials.

“We’ve heard from a lot of taxpayers — for example, [compliance assurance process] taxpayers and taxpayers in the [large corporate compliance] program — that their staff is available, and they want to ensure that we’re continuing to make progress on their exams,” Nikole Flax, deputy commissioner, IRS Large Business and International Division, said April 21 during a webinar hosted by KPMG. “We are doing what we can in a remote environment to continue to move those exams along, and we’ve been able to do that for the most part.”

The IRS's People First Initiative (IR-2020-59), released March 25, recognized that there are situations when it would be in the taxpayer’s best interests to continue with the agency's work, Flax said, adding that the IRS is working to provide more clarity on that point.

LB&I Commissioner Douglas O’Donnell said large taxpayers want to get back to normal.

“Especially in the community that we work in, taxpayers are very interested in getting back to work,” O’Donnell said. LB&I also wants to return to working normally, but what may work for taxpayers in one part of the country may not work in other parts, depending on the virus’s impact, he said.

“When you’re reaching out to a taxpayer or representative, we need to be respectful of the situation in which they’re operating,”O’Donnell said. “There are people who are unaffected and there are people who are affected.”

O’Donnell said the added flexibility to accept digital signatures and accept documents by email, which was outlined in a March 27 memo, will be instrumental in working with CAP and large corporate compliance taxpayers, as well as in other continuing work.

LB&I outlined some of its compliance priorities in response to the coronavirus pandemic in an April 14 memo to employees.

Statute of Limitations and WebEx

The People First Initiative generally says that the IRS won’t start new exams, but Flax noted it also says the agency “may start new examinations where deemed necessary to protect the government's interest in preserving the applicable statute of limitations.”

Flax said IRS agents haven’t been given any new guidance on handling statute of limitations issues. “We haven’t extended those time frames,” she said. “There isn’t anything that’s overriding the general [Internal Revenue Manual] provisions around statutes.”

Almost all LB&I employees can work from home, Flax said, so they have largely been able to continue with current work. The IRS is avoiding in-person meetings, but LB&I is engaging with taxpayers in different ways, including via WebEx videoconferencing software. The IRS is considering other ways it could expand electronic engagements with taxpayers, she said.

“[Webex] is relatively new for us — we have used it in the past but not in a widespread manner,” Flax said. “You could get contacted by your agent to request that you have a WebEx discussion to try to facilitate moving your exam along.”

Asked for more details on when the IRS might use WebEx, Flax said there are no established guidelines. “I would say, in general, when there is a benefit to having a pseudo-face-to-face discussion is when it might be helpful,” she said, adding that the IRS won’t be accepting taxpayer documents via WebEx.

The IRS is using WebEx only with taxpayers with whom it has a current relationship, Flax said. “We’re using it right now in situations where we do have some prior experience with the taxpayer,” she said.

Information Requests

Flax asked that taxpayers continue to respond to information requests to the extent possible. “I think our folks are working hard to try and be flexible with taxpayers,” she said. “You have to find the right balance in terms of getting the information that we need for the exam.” Flax said taxpayers should elevate issues if they run into problems responding to broad information requests.

The IRS hasn’t issued specific guidance on dealing with information requests amid challenges posed by the coronavirus crisis, O’Donnell said. “The expectation would be that the managers and agents would exercise judgment at the local level,” he said.

Flax said the IRS is trying to be flexible with its employees’ schedules given the challenges they’re experiencing working from home, and she asked that taxpayers try to be flexible as well.

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