LB&I announces new compliance campaigns

Tax Hot Topics newsletterThe IRS Large Business and International (LB&I) division on July 2 announced five new compliance campaigns, including a focus on virtual currency. The addition of the five new campaigns boosts the total number of LB&I campaigns to 40 since the initiative was rolled out in January 2017.

The five latest campaigns focus on:
  • Restoration of sequestered AMT Credit carry-forward
  • S corporation distributions
  • Virtual currency
  • Repatriation via foreign triangular reorganizations
  • Section 965 transition tax

With respect to virtual currency, the IRS in 2014 determined in Notice 2014-21 that virtual currency is property for federal tax purposes. This latest campaign will address noncompliance related to the use of virtual currency, and will include multiple treatment streams, including taxpayer outreach and examinations. The IRS will also consider future education efforts, including guidance and the issuance of practice units.

Notably, this campaign states that the IRS is not currently contemplating a voluntary disclosure program to address tax-noncompliance. Rather, taxpayers are urged to correct their tax returns as soon as practical. IRS guidance regarding virtual currency is limited, and taxpayers should contact their tax advisor to determine the extent to which transactions involving virtual currency are taxable or subject to information reporting.

With respect to the Section 965 Transition Tax campaign, LB&I appears to indicate that its outreach efforts have concluded, and were in conjunction with the April due date of the first installment of the tax. In its campaign announcement, LB&I does not make any reference to future guidance or direction with respect to any transition tax that may have been overpaid.

Contact Liz Askey
Managing Director
Tax Practice Policy & Quality
T +1 202 521 1513

Shamik Trivedi
Senior Manager
Washington National Tax Office
T +1 202 521 1511

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