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The Large and Mid-Size Business Division (LMSB) developed the Industry
Issue Resolution Program to work with business taxpayers, industry associations,
taxpayer representatives, and other interested parties to identify frequently
disputed tax issues common to a significant number of business taxpayers and
to resolve those issues through published or administrative guidance. Resolving
issues through prefiling guidance rather than post-filing examination is a
goal of both the Service and the Office of Chief Counsel. -
The Service announced the Industry Issue Resolution Pilot Program in
Notice 2000-65, 2000-2 C.B. 599. The objective of the pilot program was to
establish and evaluate a procedure to resolve frequently disputed tax issues
that are common to a significant number of large or mid-size business taxpayers
through prefiling guidance rather than post-filing examination. After evaluating
the pilot program, the Service announced in Notice 2002-20, 2002-17 I.R.B.
796, that the IIR Program would be made permanent. -
Notice 2002-20 expanded the IIR Program to identify and resolve frequently
disputed issues common to any size business taxpayers and to address opportunities
to reduce burden for all business taxpayers. LMSB and the Small Business and
Self-Employed Division (SB/SE) share operational responsibility for the IIR
Program. -
Revenue Procedure 2003-36, 2003-18 I.R.B. 859, sets forth the procedures
for business taxpayers, industry associations, and other interested parties
to submit issues for consideration under the IIR program. The program was
modified to allow issues to be proposed on a continuous basis and to provide
for selections for the IIR program to be made at least semi-annually.
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Generally, the primary method of soliciting issues for the IIR program
was by means of Notices. Because submissions may now be made at any time,
the Service may issue periodic News Releases concerning the IIR program which
will include an invitation for submission of proposed issues.
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The issues most appropriate for inclusion in the IIR Program will have
two or more of the following characteristics:-
The proper tax treatment of a common factual situation is uncertain
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The uncertainty results in frequent, and often repetitive, examinations
of the same issue -
The uncertainty results in taxpayer burden
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The issue is significant and impacts a large number of taxpayers, either
within an industry or across industry lines -
The issue requires extensive factual development, and an understanding
of industry practices and views concerning the issue would assist the Service
in determining the proper tax treatment
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The following issues are not suitable:
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Issues that are unique to one or a small number of taxpayers
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Issues that are primarily under the jurisdiction of Operating Divisions
of the Service other than the LMSB and SB/SE Divisions -
Issues that involve transactions that lack a bona fide business purpose,
or transactions with a significant purpose of improperly reducing or avoiding
federal taxes -
Issues that involve transfer pricing or international tax treaties
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The IIR Program is intended to engage business taxpayers, industry associations,
and other interested parties in the guidance process. Because other avenues
are available for Service personnel to suggest issues that need guidance,
a proposal for the IIR Program from an employee, in general, will be considered
only if the proposal is adopted and sponsored by a business taxpayer, industry
association, or other interested party.
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An issue submitted for consideration under the IIR Program is not required
to be submitted in a particular format. The submission should, however, include
an issue statement, a description of why the issue is appropriate for the
IIR Program, an explanation of the need for guidance, the estimated number
of taxpayers affected by the issue, and the name and telephone number of a
person to contact if additional information is needed. The submission may
also include a recommendation as to how the issue may be resolved. All submissions
are made available for public inspection and copying in their entirety; therefore,
the submission should not include confidential, taxpayer-specific information.
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Submission of issues for consideration under the IIR program will be
directed to the LMSB Office of Pre-Filing and Technical Services. That office
will prepare a package (recommendation package) consisting of the information
contained in the submission package and a check sheet for recommendations
as to inclusion of an issue in the IIR Program. That office will forward the
recommendation package to all functions from whom input is appropriate, including
Counsel. -
The recommendation package directed to Counsel will be sent to LMSB
Division Counsel to the attention of the Senior Legal Counsel (PFTG) (SLC
PFTG). The SLC PFTG will forward the recommendation package, with any additional
background material to the Technical Services Section of the Office of Associate
Chief Counsel (PA) for assignment and the due date for a response from the
Associate office with jurisdiction over the issue. The SLC PFTG will also
advise all LMSB Area Counsel of the IIR issues that have been submitted through
the Senior Legal Counsel located at the Division Counsel (LMSB) headquarters
office. -
To enable LMSB and SB/SE to timely consider the IIR issues submitted,
the Associate Offices will review the recommendation packages and, within
the time frame established for response, advise the SLC PFTG or, if otherwise
indicated, the Office of Pre-Filing and Technical Services, as to the appropriateness
of the issue for possible inclusion in the IIR Program.
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LMSB and SB/SE will, first independently and then cooperatively, review
the IIR submissions to determine the order of priority that those functions
believe the issues should be considered and recommended for possible inclusion
in the IIR program and on the Guidance Priority List or a periodic update
of that list. LMSB and SB/SE Division Counsel will assist in the review and
prioritization process.
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Issues selected for the IIR program will be included on the Guidance
Priority List or the periodic update of that list. However, a recommendation
by LMSB or SB/SE does not guarantee that the issue will be selected either
as an IIR project or for inclusion on the Guidance Priority List or a periodic
update of the list. In deciding whether to select issues recommended by LMSB
and SB/SE under the IIR Program for inclusion on the Guidance Priority List,
the Office of Chief Counsel and the Treasury Department will consider, among
other things, recommendations from other sources and whether the requested
guidance under the IIR Program promotes sound tax administration. Projects
selected for the IIR Program may either be included on the Guidance Priority
List for the upcoming year or on a quarterly update to the list during the
year.
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The Service, Treasury, and Chief Counsel will staff each project that
is included in the IIR Program with a team (the IIR team). The team is responsible
for gathering facts; meeting with taxpayers, industry associations, and other
interested parties; analyzing relevant information; and proposing a resolution
for the issue. IIR team members will include appropriate personnel from LMSB
and SB/SE, the Office of the Associate Chief Counsel with subject matter expertise
with respect to the issue, Appeals, and Treasury. Typically, the LMSB Industry
Counsel for the industry or issue to which the IIR pertains will be a member
of the team. Other personnel, as needed, may be team members. In some circumstance,
the Service may find it necessary to hire outside experts. -
The Associate Chief Counsel representative on the IIR team will serve
as the subject matter expert and the primary drafter of any proposed guidance.
The preparation and issuance of the published guidance under the IIR Program
is the sole responsibility of the Office of Associate Chief Counsel. -
Activities and duties of team members include:
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Participate in work team and industry orientations
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Assist in creating IIR work plan
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Provide technical expertise
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Discuss industry’s proposal for resolution
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Seek and evaluate facts and legal positions on the issue
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Consult with audit teams dealing with the issue
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Ensure that Counsel management stays informed during the project
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All procedures applicable for published guidance projects on the Guidance
Priority List are equally applicable to IIR projects included on the Guidance
Priority List. The representative of the Office of Associate Chief Counsel
is responsible for the clearance and approval process for IIR published guidance
projects. Briefings on proposed guidance will include, whenever feasible,
all IIR team members.
