Tax & Accounting Blog

IRS Large Business & International Division Issues New Rules Governing Information Document Requests in Examinations

1042-S, 1099, Blog, International Reporting & Compliance, ONESOURCE, Tax Information Reporting, Trust Tax July 17, 2013

4562The IRS Large Business and International Division has announced that all Information Document Requests (lDRs) issued after June 30, 2013, must comply with certain new principles. If the new rules are not followed, IDRs will not have effect. Moreover, any existing Memorandum of Understanding relating to IDR management that does not comply with the principles is no longer effective. IDRs are the requests for paper and electronic records that IRS examiners send to a company in advance of beginning an examination (initial IDRs) and there can also be additional IDRs issued as an examination unfolds. IDRs typically might request:
– Copies of forms and supporting documentation for filings
– A company’s policies, procedures and systems
– Electronic copies of data from company systems
– Specific records, correspondence, or files.

There are three newly announced principles for the IDR process in LB&I examinations.
1) All IDRs issued during the course of an examination must be issue focused; that is, the examiner must identify and state the issue that has led the examiner to request the information included in the lDR.
2) The examiner must discuss the lDR with the taxpayer in advance of issuing it.
3) Both parties must discuss and determine a reasonable timeframe for response.

LB&I states that all LB&I examiners and specialists should have completed new mandatory training on IDRs. Through the implementation of the changes, the LB&I division intends that the lDR process will be more efficient, and as a result there will be less need to enforce IDRs through summonses. Changes to the IDR enforcement process are expected later this year. Before the new enforcement process is implemented, however, LB&I Acting Director Paul DeNard states that it is essential that all lDRs issued during the course of an LB&I examination meet the requirements discussed in the examiners’ recent training.

Editor’s notes:
Marianne Couch has authored a number of blog posts on tax information reporting, trust tax, and FATCA topics. Visit her archives page to view all of her posts.

Thomson Reuters ONESOURCE Tax Information Reporting offers a wide-range of educational webcasts on tax information reporting issues. Visit our Tax Information Reporting webcast page to learn more and register for an upcoming webcast.

Visit to learn how COKALA Tax Information Reporting can help your organization. (edit)