Industry Issue Focus (IIF) Fact Sheet - March 2007 |
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The Large and Mid Size Business Division (LMSB) of the IRS has two major and often opposing challenges in applying tax law with integrity and fairness: the need to respond to a continually changing business environment and the confines of limited resources.
Changing Business Environment
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Today’s large corporate taxpayer operates in a global environment that often crosses international tax jurisdictions.
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Domestically and internationally, very sophisticated tax practitioners are devising complex transactions to reduce their U.S. taxes.
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LMSB faces an ongoing challenge of ensuring industry issues are properly addressed when Industry Directors have no line management authority over significant cases and/or sub-industries.
Limited Resources FY 2006 Facts
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LMSB is responsible for the examination of businesses with assets of $10 million or more.
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These businesses filed 175,862 tax returns, some of which are thousands of pages in length.
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With these returns, businesses paid $206 billion in taxes.
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There are 5,132 highly skilled revenue agents and specialists in the LMSB division to examine these complex filings.
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IRS estimates these businesses are responsible for $25 billion or 7% of the tax gap (the difference between estimates of taxes that should be paid and taxes actually collected).
To keep pace with this changing business environment and ensure compliance, LMSB has implemented the new Industry Issue Focus strategy to concentrate on high risk tax issues. This strategy gives LMSB the focus and flexibility to keep pace with and respond to changes in business practices which may create compliance risks. And it provides several additional operational benefits as well.
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Allows the division to resolve issues across industry lines with consistency.
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Continues to improve currency by focusing on issues with the highest risk.
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Provides for flexible deployment of resources to increase coverage of non-compliant taxpayers.
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Enhances oversight of and accountability for high risk issues.
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Combines technology and experience to identify and prioritize issues.
Once identified, issues are prioritized or tiered based on how prevalent they are across industry lines and the level of compliance risk they present. Management direction and resource deployment will be focused upon those areas with the greatest risk. Ultimately, LMSB intends to examine more taxpayers by focusing upon Industry Issues.
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Page Last Reviewed or Updated: November 28, 2007