“Effective with the issuance of this LB&I Directive, all Tier I, II and III issues are no longer tiered. These issues should be risk-assessed and examined in the same manner as any other issue in an audit. All prior Industry Director Directives (“IDDs”) relevant to these issues are withdrawn and should no longer be consulted or followed. To the extent any of the IDDs included guidance or tools relevant to risking an issue, the guidance or tools will be made available through the IPG and IPN community websites. References to tiered issues in other IRS Administrative Guidance, such as the IRM, Coordinated Issue Papers, or Industry Guides, are no longer valid. After a thorough review, such Administrative Guidance will be updated accordingly.”
On August 17, 2012, the I.R.S. Large Business and International Division officially ended it’s Tiered Issue Program. Under the Tiered Issue Program, certain issues were categorized as “Tier I – III.” Tier I issues were characterized as “high risk transactions” where there was a perceived risk of non-compliance by taxpayers. Tier II and III issues were ranked as being progressively lower non-compliance risks, though still issues which required increased scrutiny. Until August 17, 2012, a research credit claim on an amended return was a Tier I issue.
The Tiered Issue Program will be replaced by the Issue Practice Group (IPG) program still in development; the IPG program will bring together experts within the I.R.S., but without singling out specified tax benefits. While the end of the Tiered Issue Program will certainly impact the I.R.S.’s enforcement priorities, it remains to be seen how this will impact taxpayer claims for the benefits to which they are entitled, including the R&D tax credit and the Domestic Production Deduction (DPD).
If you or your clients can benefit from the Research and Development Tax Credit or other benefits, there remains time to claim them before September and October filing deadlines. Please contact alliantgroup on our website, or for immediate assistance at 1-800-564-4540, for help determining whether tax benefits may be available to you.