On March 26, 2016, the IRS issued Revenue Procedure 2016-19 to describe new procedures for taxpayers and other entities under the jurisdiction of the Large Business and International (LB&I), Small Business and Self Employed (SB/SE) and Tax Exempt and Government Entities (TE/GE) Operating Divisions to submit issues for consideration under the Service’s Industry Issue Resolution (“IIR”) Program. The objective of the IIR Program is to identify and resolve through pre-filing guidance frequently disputed or burdensome tax issues that are common to a significant number of taxpayers. This Revenue Procedure supersedes Revenue Procedure 2003-36,92 and updates, revises and clarifies the procedures.
The IRS announced the Industry Issue Resolution Pilot Program in 2000 to establish a procedure to address through pre-filing guidance rather than costly post-filing examination of frequently disputed tax issues. In 2002, the program was made permanent.93
The types of issues most appropriate for consideration under the IIR Program must have two or more of the following characteristics:
- The proper tax treatment of a common factual situation is uncertain;
- The uncertainty results in frequent, and often repetitive, examinations of the same issue;
- Frequent, and often repetitive, examinations require significant resources from both the IRS and impacted entities;
- The issue is significant and impacts a large number of entities;
- The issue requires extensive factual development; and
- Collaboration would facilitate proper resolution of the tax issue by promoting an understanding of entities’ views and business practices.
The Revenue Procedure has identified the following types of issues that generally are not appropriate for consideration under the Program: (i) issues unique to one or a small number of entities; (ii) issues not under the jurisdiction of LB&I, SB/SE or TE/GE Operating Divisions; (iii) issues involving transactions that lack a bona fide business purpose, or transactions with a significant purpose of improperly reducing or avoiding federal taxes, and (iv) issues involving transfer pricing or international tax treaties. If the issue submitted is accepted, the IRS establishes an IIR team, drawn from the LB&I, SB/SE or TE/GE Operating Divisions, as well as IRS Appeals, the Office of Chief Counsel and the Treasury Department, to analyze the issue(s) and develop the appropriate guidance. The determination of the issue may result in published guidance, such as a regulation, revenue ruling, revenue procedure or notice. The request to the IIR Program is not required to be submitted in a particular format, but should include an issue statement, description of why the issue is appropriate for the IIR Program, an explanation of the need for guidance, an estimate of the number of entities affected by the issue, a description of how the requestor relates to those entities and how the issue may be resolved. The IIR Program request may be submitted at any time during the calendar year, and should be submitted by e-mail to IIR@IRS.Gov.