CFOs, Tax Departments Face New IRS Approach to Delinquent Information

June 2014
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CFOs, Tax Departments Face New IRS Approach to Delinquent Information

At a glance

Financial executives at major organizations are increasingly collaborating with their tax departments and monitoring the expanded use of enforcement actions by the Internal Revenue Service under stricter guidelines for complying with information document requests (IDRs).

Under tough new IRS rules, tax departments could receive “delinquency notices” or even summonses if they fail to meet deadlines established for IDRs. However, there are a number of measures CFOs and tax departments can undertake to ensure they do not run afoul of these requirements and receive an unwelcome enforcement action.

IDRs are the IRS’s informal way of collecting information during the course of an audit. The IRS has also always had the authority to issue summonses and seek enforcement of such summonses in court, although their use remains relatively infrequent. That may change, however, as the IRS’s new policy regarding IDRs that are deemed delinquent dramatically decreases the discretion of the front-line IRS agent to extend deadlines. It also implements a strict three-step process that ultimately culminates in the issuance of a summons.