Continued suspension of IDR procedures offer you additional time to respond to an agent’s request for documents when under audit.
In a memo, the Internal Revenue Service’s (IRS) Large Business and International Division (LB&I) recently announced an extension of the suspension of information document request (IDR) enforcement procedures. IDRs are the typical form used on audits to target an issue and request taxpayer documents related to the issue. Here are some pertinent details.
On March 13, 2020, President Trump declared a national state of emergency because of the COVID-19 pandemic. On March 25, 2020, the IRS announced that, as part of its People First Initiative, it was suspending all in-person contacts and some compliance actions through July 15, 2020. Specifically, the IRS announced it would not start new field, office and correspondence examinations unless a new examination was necessary to protect the government’s interests.
In March 2020, the LB&I said IDR enforcement procedures would be suspended through July 15, 2020. Then, in April 2020, the division clarified its compliance priorities for the period ending July 15, 2020. Generally, it would not begin new return examinations before July 15, 2020. However, LB&I managers had the discretion to open an examination into previous year, subsequent year and related returns associated with an existing examination.
Extension and Exceptions
In a memo issued at the very end of 2020, the LB&I says it would generally extend the suspension of IDR enforcement procedures through June 30, 2021. Also, in general, the LB&I exam activities will continue under normal procedures, with some exceptions, through June 30, 2021, “and thereafter.” Exceptions include:
Appointments. Whether in-person or virtual, an appointment can still be scheduled depending on the facts and circumstances of a taxpayer. While in-person contact is allowed, the IRS will continue to support performing work virtually to accommodate employees or taxpayers who may have concerns about in-person contact.
A Hold on New Discriminate Analysis Score (DAS). The IRS uses DAS, a computer model, to score examination potential for corporate returns with total assets of $10 million or more. These cases will continue. IRS managers have discretion in approving previous, subsequent and related returns associated with an existing DAS examination.
If you believe you may be subject to IDR enforcement procedures, the extended deadline affords you more time to assess your exposure and identify your obligations. Your Moore Doeren Mayhew advisor can assist you if you are wondering how to respond to an IDR from an IRS agent, and whether it is better to take advantage of the continued suspension. Contact us today!