Engineering Firm Seeks Policy Changes to Help Industry

January 4, 2021

Hon. Charles P. Rettig
Commissioner
Internal Revenue Service
1111 Constitution Avenue, NW
Washington, DC 20224

Re: Comments on IRS Review of Regulatory and Other Relief to Support Economic Recovery, 85 Fed. Reg. 73,252

Dear Commissioner Rettig:

Fluor Corporation (“Fluor”) appreciates the opportunity to submit these comments concerning requirements that can be modified to assist taxpayers with the ongoing economic recovery from the Coronavirus Disease 2019 (“COVID-19”) pandemic in response to the Internal Revenue Service's (“IRS”) request. Fluor is a global, publicly-traded engineering, procurement, construction and maintenance company, providing innovative services to government and private-sector clients in diverse industries. Headquartered in Dallas, Texas, Fluor was founded in 1912 and has over 45,000 employees working in 60 countries worldwide.

1. Background

On May 19, 2020, the President signed Executive Order 13924, Executive Order On Regulatory Relief to Support Economic Recovery (“EO 13924”), to direct agencies to address the economic emergency resulting from the COVID-19 pandemic by “rescinding, modifying, waiving, or providing exemptions from regulations and other requirements that may inhibit economic recovery, consistent with applicable law.” Specifically, EO 13924 encouraged agencies to:

• “promote economic recovery through non-regulatory actions;”

• “identify regulatory standards that may inhibit economic recovery and . . . consider taking appropriate action . . . to temporarily or permanently rescind, modify, waive, or exempt persons or entities from those requirements;” and

• “consider the principles of fairness in administrative enforcement and adjudication,” including “[a]dministrative enforcement should be prompt and fair,” and “revise their procedures and practices in light of them, consistent with applicable law.”

On November 5, 2020, the IRS published a notice in the Federal Register (85 Fed. Reg. 73,252) inviting members of the public to submit comments to the IRS concerning regulations and other requirements that can be rescinded, modified, or waived to assist business and individual taxpayers with the ongoing economic recovery from the COVID-19 pandemic. These comments are in response to that request.

2. Continuing Economic Impact of COVID-19

The COVID-19 pandemic has had a severe impact on the U.S. economy as a whole and on the cash-intensive engineering and construction industry (E&C) in particular. Many of the markets that Fluor and its peer companies service, from energy to mining to infrastructure, have seen significant impact. Both private and public sector clients have delayed or cancelled projects and future capital spending has been curtailed or cut entirely.

As a result, maintaining an adequate cash balance remains a significant challenge for Fluor and many E&C companies. As noted, the E&C industry is a cash-intensive industry where funds are used primarily to cover payroll and purchase or lease material and equipment. With many key markets suffering a contraction as result of COVID-19, there has been extraordinary pressure on cash flow as companies seek to maintain the key personnel and other resources that will be needed when the economy recovers post-COVID-19 — but which personnel and resources are currently idled due to lack of work.

In the current economic climate created by COVID-19, many companies, including Fluor, are looking for ways to increase liquidity and bolster their balance sheets without increasing their debt levels and negatively impacting their credit profiles.

3. Recommendations

The IRS has taken many steps to provide relief to taxpayers affected by the COVID-19 pandemic, including postponing deadlines for filing tax returns, pausing enforcement activity, and facilitating electronic signatures and electronic filing of certain claims. Fluor recommends that the IRS take some temporary steps to speed up the federal tax refund process to get much-needed cash in the pockets of the taxpayers to which those refunds are due.

Prioritize and Expedite Refund Audits. First, the IRS should prioritize and expedite refund audits in order to get refunds in the hands of taxpayers quickly. Many tax refund claims are selected for audit. Even in normal times, audits can last for many months, or even years, but refund audits may be delayed even longer due to COVID-19 delays or resource availability. For example, Fluor filed an amended return in May of 2019, which was selected for audit, but as of January 2021, Fluor has yet to be provided the official “roadmap” of the proposed audit by the IRS.

While there are provisions for expedited tentative refunds in some cases, the so-called “quickie” refund, not all returns are able to benefit from this expedited process, for example, if the refund is due in part to foreign tax credits. In addition, claims in excess of $2 million ($5 million for C corporations) are held up further while the payment is approved by the Joint Committee on Taxation (“JCT”). While we understand that the IRS has been working with JCT to speed up JCT reviews of refund audits, it does not necessarily help taxpayers whose refund audits are not yet complete. In the interim, the refunds claimed essentially remain on deposit with the IRS when they could be used during this critical time to pay employees or otherwise strengthen the taxpayer's business.

Allow Provisional Refunds. Second, pending completion of refund audits, Fluor recommends that the taxpayer be allowed provisional use of the funds for payment of business expenses. The IRS would not concede entitlement to refund, so the audit would continue. As a result, it does not prejudice the IRS's ability to continue the audit and determine whether the refund was correct. The proposal could include additional safeguards to protect the government's interests, such as extending the statute of limitations for audits associated with these new tentative refunds and requiring the taxpayer to post bond for any excess refund, similar to the existing expedited refund procedure set forth in section 4.36.3.7 of the Internal Revenue Manual.

This proposed relief would be temporary — ending after the end of the COVID-19 emergency declaration.

These recommendations will have the effect of moving money to companies rapidly to alleviate cash flow issues, and because they result in a refund of money already paid into the Treasury, it does so without incurring additional cost to the American taxpayer.

Thank you for your consideration of these recommendations. Please do not hesitate to contact us if we can provide further information or otherwise be of assistance

Sincerely,

Fluor Corporation
Irving, TX