through Effective Planning, Execution and Resolution Quality Examinations LMSB Quality Examination Process [Industry] Team [number] 7114 Meeting [Meeting Date] Achieving

Quality Examination Process Definition: The Quality Examination Process – QEP – is a systematic approach for engaging and involving taxpayers in the exam process, from the earliest planning stages through resolution of all issues and cases.

Quality Examination Process Goals: High quality, timely exams. Taxpayer engagement. Improved compliance. Benefits: Streamlines processes. Reduces burden and duplication. Improves our communication and consistency in dealings with taxpayers.

LMSB Quality Examination Process 4 Purpose: Assess the Process’ usage and effectiveness and find ways to: Foster better communication. Promote joint, issue-focused audit plans. Improve planning consistency. Streamline process / reduce burden. The back story: LMSB’s 2009 review of the Joint Audit Planning Process.

LMSB Quality Examination Process 5 Reviewers gathered feedback from many internal, external stakeholders. Internal: LMSB executives, managers Revenue agents, international examiners, field specialists Case Quality Improvement Council, PQAS, C&L External: Tax Executives Institute Taxpayers IRSAC

LMSB Quality Examination Process 6 Agents, managers and others shared concerns about the Process. They said the Process: Can be complicated, burdensome to administer. Appears to shift audit control from Service to taxpayer and / or favors taxpayers’ interests over IRS’. Doesn’t give teams enough flexibility. Doesn’t set clear enough accountabilities for making the audit process successful.

LMSB Quality Examination Process 7 Taxpayers shared their experiences and desires for the future. Taxpayers said they wanted: More consistent exam process administration. More involvement, better communication with teams. Earlier and better understanding of dispute resolution tools/options. Earlier and more consistent access to specialists, managers, Counsel and others.

LMSB Quality Examination Process 8 LMSB leadership approved changes that reinforce Quality Examinations. Retire the Joint Audit Planning Process, the 39- page Planning Guide and the Planning and Monitoring Tool. Refocus attention on engaging taxpayers throughout the ENTIRE exam process – not just during planning. Streamline existing tools and give agents new tools and resources to better manage the process, including a new reference guide and a new publication.

LMSB Quality Examination Process 9 The new publication supports agents in their discussions with taxpayers. Provides a structure for early discussions between exam teams and taxpayers. Emphasizes effective and efficient exam coordination and resolution. Highlights key exam process milestones. Outlines LMSB’s and taxpayers’ responsibilities during exams. Reinforces exam teams as leaders of the exam process.

LMSB Quality Examination Process 10 The new Reference Guide outlines all major exam activities and milestones. Lists both IRS and taxpayer responsibilities. Reinforces IRS’ control over the broader exam process. Gives exam teams more process flexibility. Helps reduce administrative burden and improves process clarity. Emphasizes the importance of consistency, clarity and communication in delivering Quality Examinations.

LMSB Quality Examination Process 11 QEP requires agents to engage taxpayers at the start of every new examination. Agents will: Physically deliver (by hand or mail) the new publication to taxpayer. Discuss applicable elements with the taxpayer. Explain the exam process / answer taxpayer’s questions. Discuss alternative resolution options. Continue engaging taxpayers throughout the entire exam process. Document their discussions in the case file and on Form Share details with fellow exam team members.

Becomes Effective: June 1, 2010 for all new corporate IC and CIC exams. This includes 1120, 1065 and 1120S, but excludes International ICS&P and employment tax exams, unless otherwise directed at a later time.

LMSB Quality Examination Process 13 QEP requires managers to verify that these conversations are taking place. Managers will: Verify with agents that conversations took place. Confirm that these conversations are documented on Form Identify and resolve (or elevate) QEP process problems. Continue reinforcing the importance of taxpayer engagement and involvement.

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