Large Business and International Examination Process


New Publication 5125 Available

After extensive collaboration between LB&I and key stakeholder groups, Publication 5125, the LB&I Examination Process PDF, is posted and will be effective May 1, 2016.    

The publication outlines the new Examination Process which provides an issue-based approach for conducting professional examinations from the first contact with the taxpayer through the final stages of issue resolution.  The enhanced process, which includes significant input from the LB&I workforce and was also jointly developed with external stakeholders, establishes roles and responsibilities for both LB&I examiners and taxpayers and sets specific expectations with respect to claims for refund. However, not all examinations are the same in scope, size and complexity; therefore, portions of the publication may be more applicable to some cases than others.  

Publication 5125 highlights key factors in each phase of the examination including Planning, Execution and Resolution and will replace Publication 4837, Achieving Quality Examinations through Effective Planning, Execution and Resolution, for cases starting as of May 1, 2016. Updates to IRM 4.46 sections 1, 3, 4 & 5 will be published on or before May 1, 2016.  For in process cases as of May 1, we will transition the LEP process by adopting changes in the Execution and Resolution phases (IRM 4.46.4 & 4.46.5).  

Below are some of the key changes identified in Publication 5125:

Key Changes

  • New - LB&I Examination Process (LEP) publication 5125

    • Replaces Pub 4837 commonly referred to as Quality Examination Process (QEP).

    • Sets clear expectations for LB&I examiners, taxpayers, and representatives.

    • Examiners are expected to work transparently in a collaborative manner with taxpayers to understand their business and share the issues that have been identified for examination.

    • Encourages taxpayers and/or representatives to work transparently with examiners to provide an overview of business activities, operational structure, accounting systems and a global tax organizational chart.

    • Establishes expectations for working collaboratively to develop audit steps, timelines and providing appropriate personnel to actively assist in the development of the issue(s) identified.

  • New - Claim for Refunds Requirements

    • Requires adherence to Treas. Regs. 301.6402-2 and 301.6402-3.

    • Defines a designated period for the acceptance of informal claims.

    • Allows for early identification of issues and resource needs in the exam planning stage.

  • New - Issue Driven Examination Process

    • Focuses the right resources on selected issues.

    • Encourages collaboration within issue teams where every examiner and their managers are equally responsible and accountable for the examination.

    • Leverages knowledge transfer among technicians.

    • Establishes case timelines as determined by the most complex issues.

    • Provides examiners an optional issue-driven risk analysis form (13744-I).

  • New - Issue Development Model

    • Relies on active dialogue and fact sharing.  

    • Seeks ongoing acknowledgement of facts to ensure accurate tax determinations.

    • Updates IRM 4.46 to include the directives issued on the Information Documentation Request (IDR) Process.

    • Introduces the “Acknowledgment of Facts” IDR process for cases heading to Appeals.

LB&I examiners will discuss this publication at all opening meetings.