The Industry Issue Resolution Program is actually a number of tools and programs that the IRS offers to help taxpayers out when it comes to resolving all sorts of controversial tax issues that arise from being in a specific industry. So this means that the Industry Issue Resolution Program helps fix tax issues that happen frequently and are onerous to a significant number of business taxpayers. The overall purpose of the program is to give guidance in terms of these issues to the business taxpayers so that they can reduce the amount of time and expenses it takes to resolve certain case-by-case issues.
How the Process Works
Many times individual taxpayers can suggest issues to the IRS and possible options for resolution, but most of the time these issue suggestions are brought about by industry associations and other groups that represent large numbers of taxpayers. All of these submissions must clearly describe the tax issue in an issue statement and thoroughly explain why exactly this issue is appropriate for the program, and why guidance from the IRS is needed. It also must include an estimated number of taxpayers in the industry who are being affected by the specific issue, and you also have to include a name and number for a specific individual or office that the IRS can contact if they need more information. An analysis in terms of how the issue could be resolved also must be included in each submission.
Every submission to the Industry Issue Resolution Program is available to the public, so it’s important to not include any kind of taxpayer specific or confidential information in the submission. Those who are interested in making a submission should do so by emailing IIR@irs.gov.
When the IRS is looking at all of the issue submissions and figuring out which issues they need to address they will consider appropriateness, which includes the overall likelihood that the IRS can essentially provide guidance quickly and efficiently given that they’ll have enough resources and staff available to create the guidance.
When it comes to deciphering what is appropriate and what isn’t with the Industry Issue Resolution Program it’s a good reference point to consider that an appropriate issue with the program will generally have at least two of the following characteristics:
- A general uncertainty throughout an industry as to the tax treatment within a specific circumstance or issue
- Repetitive and often frequent submissions or examinations of a specific issue
- A legitimate and significant burden on individual and business taxpayers
- Materiality, which refers to the amount of taxpayers that are significantly affected by the specific issue. These taxpayers can be in the same industry as one another or the issue can cross industry lines as well
- A factual determination being a major component to the issue, which essentially means that the issue truly does need to be resolved and the submission legitimately provides the evidence for the need for guidance
There are many other issues that are deemed not appropriate for the Industry Issue Resolution Program, and these issues include those that:
- Are affecting one taxpayer or small group
- Are within an IRS jurisdiction of an exempt organization or government entities division
- Include transactions with a lack of bona fide business purpose, or transactions that are executed with a proven purpose to avoid or reduce federal taxes
- Involve specific international tax issues
Review and Resolution
Once an issue has been submitted the IRS, the Treasury and the Office of the Chief Counsel will decide if it requires a resolution or not. That’s when an official team will examine the issue and eventually offer a solution, but if the team decides they need more information they’ll request that information from the interested party or whoever wrote the issue submission. This group can, of course, provide additional information, but they can’t participate in any other part of this process.
This is what occurs when the recommendation or resolution is approved, and it includes the publication of the reached solution by the IRS. The form in which these actually affect business taxpayers typically are in revenue procedures or revenue rulings.
Some benefits of the Industry Issue Resolution Program include:
- Resolving an issue that affects many taxpayers
- The IRS establishing their position over an issue
- Less burden and cost in terms of disputing issues
- Getting rid of any kind of tax-treatment uncertainty
Some drawbacks to the program include:
- A settlement across an industry that isn’t good for a particular company or groups of companies
- The probability that a taxpayer’s individual situation is not considered
- The lack of involvement of taxpayers in terms of the decision-making process