On May 16, 2019, the Large Business and International (LB&I) division announced a change to how it identifies its biggest and most complex taxpayers to examine.
LB&I very recently began using data analytics to identify the taxpayers that are the largest and most complex. This program, called the Large Corporate Compliance (LCC) program, replaces the Coordinated Industry Case (CIC) program that LB&I previously utilized for compliance oversight of LB&I’s largest corporate taxpayers.
The LCC program will employ a two-step approach to identify taxpayers that should be examined based on their potential risk for non-compliance. The first step will employ an automated systemic “pointing” criteria to first narrow the population of taxpayers. At the first level of population narrowing, LB&I criteria will include items such as gross assets and gross receipts. CIC used a similar approach, but its application was neither automated nor system-wide.
Once LB&I identifies the largest and most complex taxpayers using its pointing criteria, LB&I will use data analytics to identify the returns with the highest potential compliance risk. The systemic and data analytics review will work in tandem with the feedback received from LB&I agents and examiners in determining compliance streams of the largest and most complex LB&I taxpayers.
In recent years, LB&I has made an effort to identify and target the tax issues that it believes are the most likely to create a risk of non-compliance. Thus far, IRS LB&I approved over fifty campaign issues that present the most risk of non-compliance. LB&I is planning on expanding the list in the future. This new program is in furtherance of the goal to identify more issues of non-compliance and identify the biggest taxpayers that may be at risk of non-compliance.