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LB&I Division of the IRS Announces Newest Group of Compliance Campaigns

 Posted on July 10, 2018 in Taxation Law

virtual currency, virtual currency taxes, tax audit, IRS Compliance Campaign, San Jose tax audit attorneyThe Large Business & International (LB&I) division of the IRS has announced several new compliance campaigns that signal where the IRS will allocate its audit resources. If you are a business owner concerned about the ramifications of a tax audit, it is advisable that you contact a qualified business tax attorney who can give you customized legal support. 

What is an IRS Compliance Campaign? 

The LB&I division of the IRS creates compliance campaigns in an effort to keep taxpayer examinations centered on issues. These campaigns, which are rolled out periodically, are meant to zero in on areas that present the greatest risk of non-compliance.

LB&I campaigns have been announced in January 2017, November 2017, March 2018, and May 2018. The campaigns are identified from IRS data analysis as well as employee suggestions.

What Are the New LB&I Compliance Campaigns?

One of the new compliance campaigns concerns the proper reporting of S corporation distributions. There are three reporting issues that will be scrutinized: 

  1. Gains reported by an S corporation upon the distribution of appreciated property to a shareholder;

  2. Determinations by an S corporation that a distribution is properly taxable as a dividend; and

  3. Non-dividend distributions in excess of their stock basis that would be subject to taxation. 

Virtual currency is another area on which the IRS will be focused. The IRS considers virtual currency as property and has set forth various rules on the taxation of convertible virtual currency transactions. Because the IRS is not considering a voluntary disclosure program for virtual currency non-compliance, taxpayers who have not reported virtual currency transactions should consider amending their tax returns immediately. 

The LB&I division also announced that Code Section 965 transition tax will be the subject of a compliance campaign. This section of the tax code requires that a transition tax be paid by American shareholders on untaxed foreign earnings of qualifying foreign corporations as if the earnings had been repatriated to this country. 

The IRS also announced compliance campaigns that focus on the restoration of sequestered alternative minimum tax credit carry-forward and repatriation via foreign triangular reorganizations.

Call a San Jose, CA Tax Audit Lawyer

Our firm monitors IRS campaigns and is able to advise our clients on how such areas of interest to the IRS may affect them. We also are able to advise clients on how to structure their business and what documentation should be preserved in order to withstand IRS audits. 

If you are concerned about an IRS audit of your business, call the skilled San Jose tax audit attorney at John D. Teter Law Offices at 408-866-1810.


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