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IRS issues new information document request (IDR) directives

The IRS’ Large Business & International division has issued a series of directives that streamline its information document request (IDR) process by establishing stricter deadlines and requiring the agency to issue highly specific information requests. A copy of the IRS’ recent announcement is provided here.

Information document requests are an integral part of IRS tax audits. When the agency issues the requests to taxpayers it is supposed to meet with those taxpayers and agree upon the kind of information covered under an IDR and determine an appropriate response date.

 Under prior policy, if an IDR was 15 days late, an IRS agent would follow up with the taxpayer and potentially extend the taxpayer’s deadline. If the IDR was 45 days late, the IRS would meet with the taxpayer again. And if the IDR was 90 days late, the taxpayer would convene with IRS officials and the agency would consider whether it should resort to a summons or formal document request.

IDR requests became ineffective, but under the new directive, taxpayers who miss their deadlines will likely receive IRS summons faster than they would have under the old regime. The IRS will issue a delinquency notice within 10 days of a missed deadline, issue a presummons letter if the taxpayer does not send the information within 10 days of receiving the delinquency notice, and send a summons if the pre-summons letter is ignored.

The last IDR update was issued on February 28, 2014 and gives IRS examiners and specialists more discretion in establishing an initial IDR response date with taxpayers. Companies that go through the IDR process must engage in a thorough risk analysis and study their past examinations, financial statements and other public disclosures so they can speak to the IRS knowledgeably and authoritatively.

Companies should also establish a set of goals before they meet IRS agents in their opening conference and engage in interim reviews with the IRS during the quality examination process.  Typically an IRS agent has an agenda in mind that they want to walk through with the taxpayer.