The IRS issued a memorandum on July 25 highlighting changes aimed at reducing examination times for large corporations while making the audit process more customer-driven, consistent, and efficient.
The Interim Guidance Memorandum, Reinforcing the Customer Focused, High Efficiency Large Business & International Examination Process, fosters a culture of collaboration with corporations to resolve tax issues, the IRS said last Friday.
“These changes are intended to enhance taxpayer service and tax administration by streamlining examination resources, facilitating timely issue resolution, and expediting tax certainty,” the agency stated in a media release.
The memorandum says:
Purpose: As an enforcement division, our customer service includes efficient, effective examinations and a continued culture of collaborative issue resolution. We continue to seek opportunities to improve cycle time, particularly in large corporate cases.
A tailored audit scope and a commitment from taxpayers and IRS to be aligned to execute the process in accordance with an established exam plan and timeline is essential to efficiency in examinations. Examination managers should work closely with their teams on scope and timelines so that we can be as efficient as possible.
A more efficient and current examination posture advances both taxpayer service and effective tax administration in several ways. It reduces staffing burden, preserves examination resources, improves access to tax records, facilitates discussions of current issues, reduces the cost of interest, expedites tax certainty, and reduces the exposure to future deficiencies.
Background: In furtherance of our customer-driven, effective and efficient examination resolutions, below are three modifications to existing policies and practices that we will implement in 2025 and 2026. These changes will improve issue resolution consistency and reduce examination timelines. Throughout implementation of these changes, we welcome and encourage both internal and external feedback.
The three changes the memo outlines are:
- Phasing out Acknowledgement of Facts (AOF) Information Document Request process in examinations by 2026: The AOF Information Document Request process will be eliminated due to concerns over limited value and extended timelines. Taxpayers can choose whether to use AOF until Dec. 31, 2025. This proposed phaseout approach builds in an opportunity for stakeholder feedback before any permanent changes, the IRS said.
- Expanding use of accelerated issue resolution (AIR) to large corporate cases: The memo clarifies that AIR applies to large corporate cases (formerly under the Coordinated Examination Program). AIR closing agreements allow resolved issues to apply across all filed return years in the current audit cycle.
- Stronger review of Fast Track Settlement (FTS) denials: To support broader use of the FTS process, the IRS now requires additional internal reviews and approvals before denying a taxpayer’s request.
Throughout implementation of these changes in 2025 and 2026, the IRS said it welcomes and encourages feedback from the public. Feedback can be emailed to LBI Policy Feedback.
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Tags: corporations, Income Taxes, IRS, IRS audit, Taxes
