For roughly the last ten years, the internal revenue service has made a fairly major effort to be more taxpayer friendly. The Industry Tax Issue Resolution Program is one such step.
Industry Issue Resolution Program. After years of living in denial, the IRS has come around to admitting tax forms and procedures may be a mess for certain industries. As one IRS agent put it, the agency doesn’t actually work in the industries, so it doesn’t have a lot of practical knowledge in how things work financially for the businesses on a day-to-day basis.
In a creative move, the IRS created the Industry Issue Resolution Program. This program essentially lets businesses complain to the IRS about burdensome tax issues. The IRS then considers the problem, researches alternatives and tries to come up with new regulations.
One of the better aspects of the programs is the guidance factor. If you’ve every filled out business taxes, you know there are areas that need serious clarity. You either can’t tell what the IRS is asking for or how they want it determined. Using the Industry Issue Resolution Program, businesses can seek clarity regarding many of the mystifying aspects of the tax regulations.
If a business wants to raise a topic with the IRS under this issue resolution program, it has to meet some criteria. Issued raised must have at least two of the following criteria or the IRS will reject the application.
1. The tax treatment of a common factual situation is uncertain.
2. The uncertainty results in frequent, repetitive examination of the same issue for businesses in the industry.
3. The uncertainty results in a tax burden.
4. The issue is significant and impacts a large number of taxpayers.
5. The IRS would benefit from gaining a better understanding of the industry by interacting with the industry.
The procedure for pursuing an issue in the resolution program is fairly simple, but fairly slow. Application is made to the relevant department dictated in the application instructions. You then wait until the IRS announces whether it will accept the application, announcements which only occur semi-annually! If it is accepted, the IRS will set up a team to investigate it and be in touch to get your viewpoint.