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IRS LB&I – Issues New IPU for For Audits of Outbound Transactions!

IRS LB&I – Issues New IPU for For Audits of Outbound Transactions!

The IRS, as part of an overall strategy to rethink and reorganize interactions with taxpayers, has developed “International Practice Units (IPUs),” which are training aids that are intended to describe for Revenue Agents leading practices for specific international and transfer pricing issues and transactions.

As part of LB&I International’s knowledge management efforts, IPUs are developed through internal collaboration and serve as both job aids and training materials on international tax issues.

For example, Practice Units provide IRS staff with explanations of general international tax concepts as well as information about a specific type of transaction. Practice Units will continue to evolve as the compliance environment changes and new insights and experiences are contributed. 

  • Practice Units are not official pronouncements of law or directives and cannot be used, cited or relied upon as such. 
  • Practice Units provide a general discussion of a concept, process or transaction and are a means for collaborating and sharing knowledge among IRS employees.  
  • Practice Units may not contain a comprehensive discussion of all pertinent issues, law or the IRS's interpretation of current law.  
  • Practice Units do not limit an IRS examiner’s ability to use other approaches when examining issues.  
  • Practice Units and any non-precedential material (e.g., a private letter ruling, determination letter, or Chief Counsel advice) that may be referenced in a Practice Unit may not be used or cited as precedent.  
  • References to third party service providers and documents, like news or journal articles, are for informational purposes only and do not constitute an endorsement of any vendor, document, or the services or views offered by such third party

As promised by the IRS, additional practice units have been published in 2016. The IRS Large Business and International (LB&I) division has published the following additional practice units concerning during 2016:

2016
03-07-2016 Residual Profit Split Method - Outbound (PDF, 395KB)
03-04-2016 Review of Transfer Pricing Documentation by *Outbound Taxpayers (PDF, 529KB)
03-04-2016 Outbound Services by US Companies to CFCs (PDF, 247KB)
02-19-2016 Outbound Transfer of Foreign Stock Followed by Check-The-Box Election (PDF, 351KB)
02-19-2016 Residual Profit Split Method - Inbound (PDF, 381KB)
02-19-2016 Revenue Procedure 99-32 Inbound Guidance (PDF, 443KB)
02-19-2016 Interest Expense of a Foreign Corporation Engaged in a U.S. Trade/Business (Non-Bank, Non-Treaty) (PDF, 291KB)
02-19-2016 Gross Effectively Connected Income (ECI) of a Foreign Corporation (Non-Treaty) (PDF, 225KB)
02-19-2016 Interest Expense of US Branch of a Foreign Bank Non-Treaty (PDF, 254KB)
02-19-2016 Calculating the Net Adjustment Penalty for a Substantial Valuation Misstatement (PDF, 330KB)
02-16-2016 Physical Presence Test for Purposes of Qualifying for IRC § 911 Tax Benefits (PDF, 180KB)
02-12-2016 Non-Services FDAP Income (PDF, 300KB)
02-09-2016 Receipt of Dividends or Interest from a Related CFC (PDF, 244KB)
02-08-2016 Outbound Transfer of Domestic Stock (PDF, 325KB)
02-08-2016 Pricing of Platform Contribution Transaction (PCT) in Cost Sharing Arrangements (CSA) Acquisition of Subsequent IP (PDF, 334KB)
02-04-2016 Intercompany Interest  Rates Under the Situs Rule of IRC Section 482 (PDF, 235KB)
02-04-2016 Outbound Transfer of Foreign Stock (PDF, 417KB)
02-04-2016 Change in Participation in a Cost Sharing Arrangement (CSA) – Controlled Transfer of Interest and Capability Variation (PDF, 411KB)
01-21-2016 Concepts of Foreign Base Company Sales Income (PDF, 418KB)
01-20-2016 Overview of Exchange of Information Programs (PDF, 137KB)
01-20-2016 Types of EOI Exchanges (PDF, 152KB)
01-20-2016 Field Procedures for Handling Foreign Initiated “Specific” Requests under EOI Agreements (PDF, 189KB)



The practice units identify areas of strategic importance to the IRS, provide insight as to how examiners may approach various transactions, and can provide an understanding of the context in which an examiner is approaching a particular issue or transaction.

The practice units often discuss the theories and legal authorities for examiners to rely upon when challenging a particular transaction, and identify documents an examiner will request and review. The practice units also explain the relevance of what is being reviewed in order to allow the examiner to fully understand a particular transaction and the position taken by a taxpayer.


The IRS is warning its examiners of a new area of interest to look out for when examining corporate taxpayers. In a 4 new IPUs, the IRS outlines the audit steps for its examiners to follow in reviewing the "Outbound Transfers" involving a U.S. taxpayer:

03-07-2016 Residual Profit Split Method - Outbound (PDF, 395KB)
03-04-2016 Review of Transfer Pricing Documentation by *Outbound Taxpayers (PDF, 529KB)
03-04-2016 Outbound Services by US Companies to CFCs (PDF, 247KB)
02-19-2016 Outbound Transfer of Foreign Stock Followed by Check-The-Box Election (PDF, 351KB)


As seasoned Tax Defenders, 
we would advise you to Always take advantage 
of Knowing the IRS's Playbook!

It gives you an Advantage in Representing Taxpayers 
before the Internal Revenue Service!

Need an Experienced Tax Defender? 


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Read more at: Tax Times blog

 
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