Welcome to TaxBlawg, a blog resource from Chamberlain Hrdlicka for news and analysis of current legal issues facing tax practitioners. Although blawg.com identifies nearly 1,400 active “blawgs,” including 20+ blawgs related to taxation and estate planning, the needs of tax professionals have received surprisingly little attention.
Tax practitioners have previously lacked a dedicated resource to call their own. For those intrepid souls, we offer TaxBlawg, a forum of tax talk for tax pros.
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TaxBlawg’s Guest Commentator, David L. Bernard, is the recently retired Vice President of Taxes for Kimberly-Clark Corporation, a past president of the Tax Executives Institute, and a periodic contributor to TaxBlawg.
In case you missed it, the IRS recently introduced a new approach to its audit management process, called the Quality Examination Process ("QEP"), and is effective for all LMSB corporate tax audits initiated on or after June 1, 2010. This replaces the Joint Audit Planning Process which was developed in partnership with the Tax Executives Institute in 2003. QEP has many of the same features of the 2003 process, but is much more comprehensive and in that respect is an improvement. However, the Joint Audit Planning Process was good in many respects, it was simply never used consistently throughout LMSB.
Surveys of LMSB taxpayers reflected the inconsistent application of the former process, with some reporting that they had never heard of it and others reporting little or no involvement in the development of the audit plan (a primary requirement of the process). This frustrated the leaders within LMSB because they had continuously stressed the importance of the process in their communications to the field. After obtaining input from several constituencies, LMSB decided it was time to come to market with a new and improved process. The question is whether taxpayers will feel that the results are an improvement over their past experiences.
As a follow up to my colleague George Connelly's earlier post concerning the IRS's recently announced "Global High Wealth" Industry Group, I offer some further thoughts on what the IRS is attempting to do with this new group focusing on wealthy individuals. The IRS recently announced that the group has issued its first batch of audit letters and the audits of wealthy individuals will soon commence.
The IRS has created the group in the LMSB division, which generally handles audits of the largest corporations under a "team" audit concept. A team audit means that the IRS assigns several agents to the case, including, where appropriate, specialists in areas like international taxes, financial products, and employment taxes, as well as engineers and economists.
The IRS is concerned with very wealthy individuals who own multiple entities using complicated structures to avoid U.S. federal income taxes. The individuals may be operating foreign businesses or may have foreign investments through foreign trusts, partnerships, or corporations.