The IRS’ List of Currently Active International Tax Campaigns

On April 21st, the Large Business & International (LB&I) published a list of its active tax campaigns to enhance the selection of returns for audit, more ardently identify risk issues associated with noncompliance and assist the IRS in deploying limited resources.

The IRS’ actions on these campaigns generally focus on one or more undertakings, including revising forms and instructions, providing additional guidance, and communicating with taxpayers, practitioners, and software companies. Lastly, the IRS regularly issues Soft Letters to taxpayers. A Soft Letter is essentially a reminder to the taxpayer that something about their prior-year tax return was incorrect or incomplete.
The following is a list of “Active International Tax Campaigns” that both taxpayers and their advisors should be aware of:

Cross-Border Activities:

• Foreign Tax Credit (IRC Sec. 901)
• Financial Service Entities Engaged in a U.S. Trade or Business
• Foreign Base Company Sales Income – Manufacturing Branch Rules
• Form 1120-F Delinquent Returns
• Form 1102-F Non-Filer and Protective Return U.S. Business Activity
• Treatment of Deferred Foreign Income Upon Transition to

Participation Exemption System (IRC Sec. 965)

Treaty and Transfer Pricing:

• Captive Services Provider

Withholding and International Individual Compliance:

• Expatriation of Individuals
• FATCA Filing Accuracy
• Financial Service Entities Engaged in a U.S. Trade or Business
• FIRPTA Reporting Compliance for Nonresident Aliens (NRAs)
• Foreign Earned Income Exclusion
• Forms 1042/1042-S Compliance
• Form 1120-F Chapters 3 and 4 Withholding
• Individuals Employed by Foreign Governments & International

Organizations

• Individual Foreign Tax Credit Phase II
• IRC Sec. 965 for Individuals
• Loose filed Forms 5471
• Nonresident Alien Individual Tax Credits
• Nonresident Alien Rental Income from U.S. Real Property
• Nonresident Alien Schedule A and Other Deductions
• Nonresident Alien Tax Treaty Exemptions
• Offshore Private Banking
• Offshore Service Providers
• Post Offshore Voluntary Disclosure Program Compliance
• Puerto Rico Act 22, Individual Investors Act
• Swiss Bank Program Campaign
• U.S. Territories – Erroneous Refundable Credits
• U.S. Territories Self-Employment Tax
• Verification of Form 1042-S Credit Claimed on Form 1040-NR
• Virtual Currency

Observation –Taxpayers can resolve the issues identified above by understanding the potential tax issues, adhering to the relevant tax laws, and accurately reporting transactions. I recommend reviewing this list with your tax advisor and taking the appropriate action.

Until next time,

James Dawson, CPA