The IRS has issued the much-anticipated part two of its new Information Document Request (IDR) process. This summer, the Large Business & International Division issued part one, setting forth new requirements for issuing IDRs. The Exam team is required to issue IDRs that are issue focused, have been discussed with the taxpayer, and contain a response date that has been discussed with the taxpayer and, ideally, mutually agreed upon. Part one is reiterated in the new guidance.
Part two addresses enforcement. It involves three graduated steps: (1) a Delinquency Notice; (2) a Pre-Summons Letter; and (3) a Summons. Under the time frame set forth in the directive, you may find yourself in summons enforcement proceedings about 50 days after the agreed upon response date, if you are unable to provide the information requested by then. This process is mandatory and has no exceptions, regardless of the availability of the requested information or the difficulty in obtaining it – such as documents located in a foreign warehouse. Thus, the most important take-away is to make sure you agree with Exam on an IDR response date that you expect to be able to meet.
This new process becomes effective on January 2, 2014. IDRs that are outstanding as of that date and that were not issued in compliance with part one of the new process must be reissued. If you have any questions about the new IDR process or summons enforcement, please contact one of the undersigned or any of the other Tax lawyers at Thompson & Knight.