May 2015 | Sharon Katz-Pearlman, Principal in Charge, Tax Dispute Resolution Services, KPMG LLP, discusses recent trends and issues related to tax disputes within the United States, as well as developing trends in other countries.
With more than 25 years of experience, Sharon works with clients on all aspects of their IRS matters, dealing with a wide variety of domestic and international tax issues.
My name is Sharon Katz-Pearlman. I lead the firm's tax dispute resolution network, and I also lead the global firm's tax dispute resolution group for KPMG International.
I prior to joining the firm, which is many years ago already, was a litigator with the Treasury Department, and so my practice now focuses on representing clients before the Internal Revenue Service and providing assistance in disputes.
When dealing with a dispute today, companies really have to be prepared for a number of things. The landscape in the United States has changed and is still changing. We are seeing the IRS go to a much more risk-based analysis when they look at companies. They are leaving the broad-based we'll come in and examine everything and really trying to focus on specific issues where they think that they're going to be able to generate revenue.
So I think there is a need to be prepared for a focused exam in critical issues.
You need to be prepared for the fact that your information is much more likely to be shared with other jurisdictions. The collaboration cross-border now is at really an all-time high. There are lots of things happening. Think about BEPS. Think about cross-border information sharing we spoke about during the program this morning. But that is causing a shift, and so if you enter a process of dispute resolution knowing that your information is going to be shared, there is really a need to think about consistency and making sure that the information is all correct globally and you can't just be focused on one particular jurisdiction any more.
Also specific to the U.S., there is an increased focus here on information gathering. So during the course of your audit, the IRS is now focused on developing the issues better and asking very specific questions. And they expect responses in a very timely fashion now. If you don't provide those responses, there is a much greater likelihood that this is going to escalate and that there is going to be summons involvement and things can get a lot more difficult.
The last thing that I think companies should be aware of is that there is a very large focus now on partnership exams. For many years, the service has been saying, "We are going to look at partnerships. We are going to focus on partnerships," and they didn't. They were dinged for it, if you will. They were told that they had missed the boat, that they had missed a lot of potential revenue.
So now we are starting to see that there is absolutely a climb in the number of audits of partnerships of all sizes. So I think that's something to be prepared for as well.
© 2015 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
The above information is not intended to be "written advice concerning one or more federal tax matters" subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230.
The above information is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.