Information from Administrative Practice Programming at the May ABA Tax Section Meeting

At each ABA Tax Section meeting certain committees have programing that directly impacts tax procedure, and we try to cover those committees.  At the May meeting none of the regular bloggers attended the Administrative Practice Committee meeting – usually one of the critical committee meetings for tax procedure information – but Abbey Garber and Bibiana Cruz of Holland & Knight agreed to cover this meeting.  We welcome them as first time guest bloggers.  Abbey worked for Chief Counsel in the Dallas office for many years (where I first met him) before retiring and moving to the firm.  Bibiana is an associate in the firm’s Miami office. You can view the slides from the meeting here.

The discussion of the information coming from committee meetings serves as a good reminder that the next ABA Tax Section meeting is coming up next month in Dallas.  The preliminary program is here. You can register and get other information about the meeting here.  Keith

On May 13, 2022, as part of the ABA’s Tax Section Meeting in Washington D.C., the Administrative Practice Committee invited Holly Paz, IRS Deputy Commissioner of the Large, Business and International Division (LB&I), Scott Irick, IRS Director of Small Business / Self-Employed (SB/SE) Examination Division, Abbey Garber, Partner at Holland & Knight’s Tax Controversy and Litigation Group, and Henry Cheng, Associate at DLA Piper’s Tax Controversy and Litigation Group to discuss Exam’s return to office, innovations and challenges encountered during COVID, and what Exam is currently focusing on. Paige Braddy, from Skadden Arps, moderated the panel, titled IRS Exam –Reflections on Two Years of COVID.


The IRS has completed its return to office transition after more than two years of COVID. As of June 25th, normal in-person operations have resumed. However, the IRS continues to be flexible in certain aspects such as digital/photograph signatures for some purposes, which will be accepted until October 31, 2023. In addition, other innovative tools such as virtual reading rooms and video conferencing through Microsoft Teams are now being utilized. Also, the fax machine option is receiving an upgrade as some web-based upload tools are being introduced.

During the chat, the panelists discussed the new IRS Office of Chief Counsel Memorandum 20214101F which sets forth the requirements for a taxpayer to claim an I.R.C. Section 41 research credit refund on an amended return. In summary, these requirements include: (i) the identification of all the business components that relate to the claim, (ii) identification for each business component of the activities performed, the individuals who performed such activities and the information each individual sought to discover, and (iii) providing the total qualified employee wage expenses, supply expenses and contract research expenses. The memo also provides a 45-day period (increase from the prior 30-day period) to perfect a claim for refund prior to a final determination. According to the officials, at the moment, a low volume of submissions have been received, but they expect to evaluate the process further once sufficient number of claims come in.

The group also discussed the continuing validity of Rev. Rul. 94-69. Rev. Rul. 94-69 allows large corporate taxpayers who are under continuous audit to make affirmative disclosures at the start of the audit with the practical effect of informally “amending” a return without having to file all of the required paperwork. The IRS has published a new draft form (Form 15307, Post-Filing Disclosures for Specified Large Business Taxpayers) in an effort to standardize submissions. Although this process is still being examined, the idea is for certain large taxpayers to have a clear view of what information needs to be provided and that there is consistency among taxpayers as to the information being submitted. The IRS is evaluating whether the population of eligible taxpayers will be changed.

LB&I has made some changes related to the assertion of the Economic Substance Doctrine and related penalties. As of April 22, 2022, the level of approval required to assert the application of this doctrine and its related penalty has changed: executive approval is no longer required to raise this argument and to assert the economic substance penalties. This, however, does not remove the requirement that the penalties must be approved in writing by the immediate supervisor of the person who initially determines the penalty.

The application procedure to the Compliance Assurance Process (CAP) also has undergone some changes. These include: (i) for 2022 CAP years “two filed” open returns are permitted, (ii) audited financial statements in accordance with GAAP must be provided, and (iii) new applicants will be required to complete the Tax Control Framework Questionnaire. On September 15, 2022, the IRS announced the opening of the application period for the 2023 Compliance Assurance Process (CAP) program. The application period runs from September 15 to November 15, 2022.

Partnerships are being closely monitored by the IRS and audits under the new BBA centralized partnership audit regime are ongoing. According to the officials, the IRS is looking to increase its coverage by bringing in new resources and increasing agent training in partnership exams. The IRS officials cautioned that, regardless of taxpayers having elected out of the BBA, an audit could be underway.

The Fast Track Appeals Process is also under review. Fast Track, a voluntary mediation program and an option for most disputes at Exam, is an alternative process where a mediator seeks to facilitate settlement discussions making it a shorter, and more flexible and cost-effective process. According to the IRS, they are looking to improve Fast Track by increasing agent training and by using metrics to measure progress and identify areas for improvement.  

The IRS is aware of its challenges and taxpayers’ struggles in their communications with the agency. It is focused on tackling the long processing delays and improving taxpayers’ overall experience with the IRS. To make this happen, the IRS is looking to hire 400 new agents and increase training for existing ones. It is also updating its technology and communication platforms. Leadership changes also have occurred, with the recent announcement of Lia Colbert as Commissioner of SB/SE and Maha Williams as Acting Deputy Commissioner for SB/SE Exam.  Darren Guillot will continue to serve as Deputy Commissioner for Collection. They are hopeful that these changes, along with increased resources, have a positive outcome for taxpayers and practitioners.