1. Break-out Session 1A: Federal Tax Planning
Break-out Session 1A: Federal Tax Planning
Sergio Arellano, Tax Controversy Managing Director

2. Major shift in LB&I’s approach to examinations
LB&I organizational changes – New Structure as of February 2016
Single Deputy Commissioner
Movement away from current structure of domestic vs international
Realignment of resources into nine “Practice Areas”
Five Areas Devoted to Subject Matter
Passthrough Entities
Enterprise Activities
Cross Border Activities
Withholding and International Individual Compliance
Treaty and Transfer Pricing Operations
Four Areas Represent Compliance Regions
Western, Central, Eastern and Northeastern

3. New way of doing examinations
Centralized risk model for case/issue selection
Objective to direct resources to cases with highest compliance risk
Focus on streamlined audits with issue-focused approach
Expanded use of data analytics to identify noncompliance
Development of “Compliance Campaigns” and tailored compliance treatments to address current and emerging compliance concerns
Implications for CIC and CAP taxpayers still need to be addressed
Move from Quality Examination Process (QEP) to LB&I Examination Process (LEP) - effective may 2016.
Pub 5125 is out and it focuses on the following:
Roles of Exam Team and Taxpayer
Expectation with respect to claims for refund
Three strategies in the LEP
Planning , Execution and Resolution

4. Future of Compliance Assurance Program (CAP)
Current participants:
Pre-CAP: 20 taxpayers in 2015/20 in 2014
CAP: 194 taxpayers in 2015/184 in 2014
Compliance Maintenance: 72 taxpayers in 2015/64 in 2014
Returning taxpayers (182 taxpayers in 2015/162 in 2014)
No new applications are being accepted in 2016
The future of CAP????

5. Further considerations in implementation
How will the Practice Areas work together?
Who is in charge of an audit?
Who has final say in decisions that involve multiple practice areas?
What is the role of subject matter specialists in audits?
How do IPGs and IPNs factor into the reorganization?
Audit timelines
How will statute extensions be managed?
Training for LB&I employees

6. Thank you Sergio Arellano, Tax Controversy Managing Chicago, Illinois
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