LB&I - New international “practice units” issued, guidance for examiners

LB&I - New international “practice units” issued

The IRS, as part of an overall strategy to rethink and reorganize interactions with taxpayers, has developed “practice units”—i.e., training aids that are intended to describe for agents leading practices for specific international and transfer pricing issues and transactions. The first batch of practice units was published by the IRS in December 2012.

Related content

Read a March 2015 KPMG report [PDF 176 KB] describing the practice units issued to-date.

New LB&I practice units

As promised by the IRS, additional practice units have been published. The IRS Large Business and International (LB&I) division on July 17, 2015, published three additional practice units concerning:

  • CFC purchased from related party with same country sales
  • CFC sale to related party with same country unrelated party manufacturing
  • Receipt of dividends or interest from a related CFC

Read the three practice units, together with the previously published practice units, on the IRS website.

Implications for taxpayers

Taxpayers currently under IRS examination or with an examination pending—particularly if a challenge to the taxpayer’s transfer pricing treatment or to a particular transaction is expected—might find it helpful to review the pertinent practice units.

The practice units identify areas of strategic importance to the IRS, provide insight as to how examiners may approach various transactions, and can provide an understanding of the context in which an examiner is approaching a particular issue or transaction.  

The practice units often discuss the theories and legal authorities for examiners to rely upon when challenging a particular transaction, and identify documents an examiner will request and review.  The practice units also explain the relevance of what is being reviewed in order to allow the examiner to fully understand a particular transaction and the position taken by a taxpayer.

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