The IRS’ Large Business and International (LB&I) Division enforces compliance with corporate tax laws, focusing specifically on C corporations, S corporations, and LLCs whose assets are valued at or above $10 million. (Small businesses, or companies with assets below $10 million, are monitored by a separate branch of the IRS, the Small Business/Self-Employed Division.) If you regularly visit our tax law blog, you may recall that, toward the end of 2018, LB&I launched five compliance campaigns targeting FATCA filers, taxpayers claiming foreign tax credits, taxpayers claiming work opportunity tax credits, offshore service providers, and filers of delinquent Forms 1120-F (U.S. Income Tax Return of a Foreign Corporation). More recently, LB&I announced the launch of six additional campaigns, one or more of which may impact your large business. If you need assistance resolving corporate tax issues in California, the business tax attorneys at the Tax Law Office of David W. Klasing can help your company find strategic solutions.
IRS LB&I Rolling Out Six More Compliance Campaigns for Taxpayers with Assets Above $10M
An experienced corporate tax attorney can help you successfully navigate LB&I’s latest rollout of compliance campaigns, which affect S corporations, large businesses with offshore assets, and other taxpayers. The campaigns, which were announced by the IRS in July 2019, are as follows:
- Expatriation Campaign – This campaign affects “U.S. citizens and long-term residents (lawful permanent residents in eight out of the last 15 taxable years) who expatriated on or after June 17, 2008” who have failed to file or pay taxes on worldwide income. According to LB&I, the IRS will approach this issue using “a variety of treatment streams” – among them, “examination,” which means auditing taxpayers. If you have been selected for a foreign account tax audit or other type of IRS examination, you should consult a tax audit attorney immediately for guidance on what steps to take next. The international tax lawyers at the Tax Law Office of David W. Klasing have extensive experience representing expats in FBAR audits, offshore tax evasion investigations, and other expatriate tax
- High-Income Non-Filer Campaign – Since the United States employs a citizenship-based model of taxation, income from around the world is subject to U.S. tax. Nonetheless, many U.S. citizens and resident aliens fail, whether willfully or inadvertently, to report and pay taxes on foreign income, causing large tax losses for the federal government. This campaign focuses on noncompliant non-filers with high levels of income, who typically have substantial tax liabilities. Engaging in strategic tax planning can help you to minimize your offshore tax liabilities, while keeping you in compliance with the law.
- Post-OVPD Compliance Campaign – The OVDP was the Offshore Voluntary Disclosure Program, a now-defunct IRS program that offered incentives for taxpayers – notably, protection from criminal prosecution – to come forward voluntarily with information about offshore income and assets. While the OVDP is over, U.S. taxpayers, including both individuals and business entities, are still required to report foreign accounts and assets. This campaign targets taxpayers who are out of compliance with these requirements, such as filing FBAR and Form 8938 (Statement of Specified Foreign Financial Assets).
- S Corporations Built-in Gains (BIG) Tax Campaign – As the IRS explains, “C corporations that convert to S corporations are subjected to the Built-in Gains tax (BIG) if they have a net unrealized built-in gain and sell assets within 5 years after the conversion.” This campaign focuses on S corporations that have failed to pay BIG taxes following conversion and sale of assets.
- Section 457A Deferred Compensation Attributable to Services Performed before January 1, 2009 Campaign – This campaign targets taxpayers who may be out of compliance with the provisions of 26 U.S. Code § 457A (pertaining to nonqualified deferred compensation from certain tax indifferent parties).
- S. Territories, Erroneous Refundable Credits Campaign – This campaign targets certain “bona fide residents of U.S. territories.” (For information about how bona fide resident status is determined, refer to the “Introduction” section on page four of this IRS LB&I overview.) Specifically, the campaign deals with bona fide residents who improperly claim certain tax credits on their personal income tax returns – a common trigger for tax audits.
International Tax Attorneys for Businesses and High Net Worth Individuals
Whether you own and operate a large business, or you are simply a taxpayer with substantial personal assets, you may be impacted by the IRS’ most recent LB&I compliance campaigns. Be sure to review your tax situation thoroughly with a skilled and experienced attorney-CPA, like David W. Klasing, who can work to reduce tax penalties, negotiate with the IRS, and help you or your business plan for the future. Contact us online today to arrange a reduced-rate consultation, or call the Tax Law Office of David W. Klasing at (800) 681-1295 to get started.
Also, we’ve expanded our offices! In addition to our offices in Irvine and Los Angeles, the Tax Law Offices of David W. Klasing now have offices San Bernardino, Santa Barbara, Panorama City, Oxnard, San Diego, Bakersfield, San Jose, San Francisco, Oakland and Sacramento.
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