Following their recent announcement regarding new partnership and global high wealth enforcement initiatives,1 the Internal Revenue Service (IRS) on Oct. 20 announced another enforcement initiative focusing on foreign corporations and the largest corporate taxpayers. Last week, IRS Commissioner Danny Werfel announced the IRS would be sending out approximately 150 compliance alerts to U.S. subsidiaries of foreign corporations. Commissioner Werfel noted the alerts are intended “to remind them of their U.S. tax obligations and to incentivize taxpayer self-correction.” It appears that much of the emphasis will be on transfer pricing issues and the correct reporting of related party transactions. In addition, in 2024, the IRS will initiate audits of 60 major corporations, with an average of $24 billion in assets and approximately $526 million of annual taxable income. The corporations were selected using artificial intelligence and analytics, another IRS priority.

This focus on “mega corporations” is not new. Historically, the IRS has had a program in place to routinely examine the largest segment of corporate America. The program has gone through several iterations and naming conventions over the years, most recently known as the Coordinated Industry Case (CIC) program. CIC taxpayers generally were audited annually. CIC was officially dismantled in 2019, with the announcement of the Large Corporate Compliance (LCC) program. LCC changed the model for examining large corporations, and many former CIC taxpayers were no longer selected for audit. With the Commissioner’s recent announcement, the IRS may be revisiting that decision.

Read the full GT Alert.

Print:
Email this postTweet this postLike this postShare this post on LinkedIn
Photo of Barbara T. Kaplan Barbara T. Kaplan

Barbara T. Kaplan has been named one of the top 50 women lawyers in New York City by Super Lawyers magazine, and focuses her tax litigation practice on domestic and foreign corporations, partnerships, and individuals in federal, state, and local tax examinations, controversies…

Barbara T. Kaplan has been named one of the top 50 women lawyers in New York City by Super Lawyers magazine, and focuses her tax litigation practice on domestic and foreign corporations, partnerships, and individuals in federal, state, and local tax examinations, controversies and litigation, including administrative and grand jury criminal tax investigations.

Photo of Sharon Katz-Pearlman Sharon Katz-Pearlman

Sharon Katz-Pearlman focuses her practice on the representation of large multinationals, partnerships, and other taxpayers, before the IRS. She represents clients from the pre-exam phase (voluntary disclosures, pre-filing agreements) through examination, appeals, and into litigation if necessary. In addition, Sharon has represented clients

Sharon Katz-Pearlman focuses her practice on the representation of large multinationals, partnerships, and other taxpayers, before the IRS. She represents clients from the pre-exam phase (voluntary disclosures, pre-filing agreements) through examination, appeals, and into litigation if necessary. In addition, Sharon has represented clients using the full range of IRS Alternative Dispute Resolution techniques which are available to taxpayers, and advises large companies on the IRS’s Compliance Assurance Program (CAP) and other IRS specialty programs.

Sharon has deep experience with the Mutual Agreement Procedure (MAP) and the Advanced Pricing Agreement program (APA) working with Competent Authority to reach resolution on a variety of transfer pricing issues. She also consults with multinationals dealing with enforcement activity around the world, assisting them in developing practices and procedures which ensure consistency and a full understanding of the entity’s global disputes landscape. She consults frequently with clients on application to the OECD’s International Compliance Assurance Programme (ICAP) process.