1. Tax Executives Institute, Inc. Regions V & VI IRS Liaison Meeting May 14, 2012 Quality Examination Process (QEP) Katheryn N. Houston, DFO-East, Natural Resources & Construction, LB&I Ralph Portell Moderator

2. QEP - Background On June 1, 2010, LB&I introduced the Quality Examination Process (QEP). The QEP builds on and replaces: –Joint Audit Planning Process Developed in 2003 Joint effort between LB&I and Tax Executives Institute (TEI). Joint Audit Planning Process Objectives: –Improve communication between the IRS and taxpayers during the early planning phases Where –The QEP emphasizes communication and consistency throughout the entire examination, from planning, to execution, to final resolution.

3. Feedback on Joint Planning Process Feedback from LB&I revenue agents / managers: –Too complex and burdensome –Not applicable smaller IC cases. –Resulted in less team control of exams and caused delays –Process favored taxpayers’ interests over IRS’ strategic goals –Managers and agents expressed a desire for more flexibility to manage the Process Feedback from taxpayers, TEI and other stakeholders: –Many reported not knowing about the Joint Audit Planning Process –Many thought IRS agents needed better training in using the Process. –Better training of IRS managers and senior staff in risk analysis, materiality thresholds, and the importance of pre-IDR meetings. –There should be a thorough discussion of resolution options/tools upfront –The IRS should formalize shared expectations about the exam process. –IRS agents should ensure earlier / more consistent inclusion of specialists in the audit planning process

4. What Changed Facilitate and improve communication between examiners and taxpayers and (hopefully) lead to a smoother, faster examination cycle. Incorporated best practices from the Joint Audit Planning Process Eliminate the 39 pages from Joint Audit Planning Process Guide. Revise training Expanded the focus to improving communication and coordination throughout the entire exam cycle. Develop a comprehensive QEP Reference Guide Agents are to review and discuss the publication with taxpayers at the inception of every examination

5. Quality Exam Process Effective June 1, 2010, IRS revenue agents distribute and reviewing Publication 4837 with taxpayers. The core element of the QEP are: –Taxpayer involvement and engagement. –Agents are to ensure that taxpayers are aware at all times what issues are being addressed in the examination, –How they can help make the resolution process faster and more effective. IRM 4.46 has been updated to reflect the addition of QEP Publication 4837 and the QEP Reference Guide are now posted on IRS.GOV.

6. Quality Examination Process Questions? and Discussion!