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Audit Plans Won’t Be Provided to SB/SE Taxpayers

Posted on July 30, 2020

The IRS Small Business/Self-Employed Division has no immediate plans to adopt the Large Business and International Division’s practice of providing audit plans to taxpayers, according to an agency official.

“But I think it is something we could consider,” De Lon Harris, SB/SE deputy commissioner for examinations, said during a July 29 webinar hosted by the American Bar Association Section of Taxation.

Harris was responding to an audience question from former National Taxpayer Advocate Nina Olson, who noted that LB&I taxpayers are given an audit plan that provides details such as the scope of the exam, the procedures, and time estimates.

Harris said SB/SE would have to determine when it would make sense to provide an audit plan if it decided to adopt the practice. “We could bifurcate it in some way based on type and size of taxpayer,” he said. “I always feel like there needs to be an audit plan and that communication. But where does it make sense, exactly? Maybe it does make more sense on the larger corporate issues that we’re looking at, or [on] flow-through issues.”

IDR Enforcement

Gloria Sullivan, director of Western compliance in LB&I, discussed how the COVID-19 pandemic is affecting the exam process, which resumed July 15.

Sullivan noted that LB&I issued a June 26 memo (LB&I-04-0620-0011) that instructs examiners to consider all factors in determining whether to deviate from the enforcement procedures for information document requests.

“We are very cognizant of the impact of COVID not only on our situation, but on taxpayers’ business operations,” said Sullivan. “What we’re asking our examiners to do is try to understand all of the circumstances around why an IDR may not be responded to in the normal course.”

While taxpayers can exchange some information via email, the IRS understands that many challenges remain, Sullivan said. “We want to be sensitive to that, and we are allowing quite a bit more flexibility in response times knowing these factors can be complicated,” she said.

“There is quite a bit of discretion given to frontline managers in those situations, and of course it is all about communicating and letting us know what is going on and what the problems are,” Sullivan said. “We try very hard to work with taxpayers in recognizing that this is not normal.”

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