rp-16-19.pdf

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Part III

Administrative, Procedural, and Miscellaneous

Industry Issue Resolution Program

Rev. Proc. 2016-19

SECTION 1. PURPOSE

This revenue procedure describes procedures for taxpayers and other entities
under the jurisdiction of the Large Business and International (LB&I), Small Business and
Self Employed (SB/SE), and Tax Exempt and Government Entities (TE/GE) Operating
Divisions to submit issues for consideration under the Internal Revenue Service’s
Industry Issue Resolution (IIR) Program. The objective of the IIR Program is to
identify and resolve frequently disputed or burdensome tax issues that are common to
a significant number of entities. Resolving issues through pre-filing guidance rather
than post-filing examination is a goal of the Internal Revenue Service (IRS) and the
Office of Chief Counsel.
SECTION 2. BACKGROUND

.01. In Notice 2000-65, 2000-2 C.B. 599, the IRS announced the Industry
Issue Resolution Pilot Program. The objective of the pilot program was to establish
a procedure to address through pre-filing guidance rather than post-filing
examination frequently disputed tax issues that are common to a significant number
of large or mid-size business taxpayers. After evaluating the success of the pilot
program, the IRS announced in Notice 2002-20, 2002-1 C.B. 732, that the IIR

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Program would be made permanent. In addition, Notice 2002-20 expanded the IIR
Program to address issues common to small businesses, as well as large and mid-
size businesses, and to address opportunities to reduce burden for all business
taxpayers.
.02. Revenue Procedure 2003-36, 2003-1 C.B. 859, superseded Notice
2002-20 and revised procedures for business taxpayers, industry associations, and
other interested parties to allow issues to be submitted at any time for consideration
under the IIR Program. Revenue Procedure 2003-36 limited IIR Program
submissions to taxpayers under the jurisdiction of the LB&I (formerly Large and Mid-
Size Business) and SB/SE Operating Divisions.
.03. This revenue procedure supersedes Revenue Procedure 2003-36, 2003-
1 C.B. 859. It expands the availability of the IIR Program to issues with respect to
entities under the jurisdiction of the TE/GE Operating Division, and updates, revises,
and clarifies the procedures.
SECTION 3. SCOPE
.01. Issues appropriate for the program.
The types of issues most appropriate for consideration under the IIR Program
will have two or more of the following characteristics:
(1) The proper tax treatment of a common factual situation is
uncertain;
(2) The uncertainty results in frequent, and often repetitive,
examinations of the same issue;
(3) Frequent, and often repetitive, examinations require significant

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resources from both the IRS and impacted entities;
(4) The issue is significant and impacts a large number of entities;
(5) The issue requires extensive factual development; and
(6) Collaboration would facilitate proper resolution of the tax issues by
promoting an understanding of entities’ views and business practices.
.02. Additional criteria for accountable plans.
Notice 2005-59, 2005-2 C.B. 443, provides additional criteria for evaluating
proposed IIR Program issues for accountable plans and is incorporated by reference
into this revenue procedure. With respect to IIR Program issues for accountable
plans, the criteria set forth in Notice 2005-59 apply in addition to the requirements set
forth in this revenue procedure.
.03. Issues not appropriate for the program.
The following types of issues are generally not appropriate for consideration
under the IIR Program:
(1) Issues unique to one or a small number of entities;
(2) Issues not under the jurisdiction of the LB&I, SB/SE, or TE/GE
Operating Divisions;
(3) Issues involving transactions that lack a bona fide business purpose,
or transactions with a significant purpose of improperly reducing or avoiding federal
taxes; and
(4) Issues involving transfer pricing or international tax treaties.
.04. Requesters.
In general, a requester should be an organization or a group of entities that

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represents a significant number and cross section of the entities with the particular tax
issue or issues. For example, a retail industry group that represents large, nationwide
retailers as well as independent retailers might request pre-filing guidance through the
IIR Program on a section 263(a) capitalization issue common to all member retailers.
SECTION 4. SELECTION PROCESS

.01. A requester may submit an IIR Program request at any time during the
calendar year.

.02. An IRS representative will notify the requester when the IRS decides to
select or reject an IIR Program request.
.03. The IRS will make public, at least annually, all IIR Program requests
received and those selected. The announcement will include the name of an IRS
official to contact for information regarding the selected IIR Program requests.
SECTION 5. GUIDANCE FOR SELECTED IIR PROGRAM REQUESTS

Selected IIR Program requests may result in published guidance, such as a
regulation, revenue ruling, revenue procedure, or notice. Alternatively, selected
requests may result in new or revised administrative procedures such as an LB&I
Operating Division directive or a revision to an Internal Revenue Manual provision. In
some situations, the guidance may require taxpayers to file a request for a change in
method of accounting before changing the manner in which they treat an issue.
SECTION 6. ADDITIONAL INFORMATION ABOUT THE IIR PROGRAM
.01. IIR team.

If an IIR Program request is selected, the IRS will establish a team (IIR team) to
analyze the issues and develop the appropriate guidance. IIR team members will
include appropriate personnel from the requester and from the IRS. IRS team

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members may be drawn from the LB&I, SB/SE, or TE/GE Operating Divisions, as well
as Appeals, the Office of Chief Counsel, and the Treasury Department. An issue may
not be selected for the IIR Program if the requester does not provide appropriate
personnel to participate as IIR team members.
.02. Expectations regarding information and meetings.

Consideration of an IIR Program request is intended to be a collaborative effort
that fosters constructive dialogue in an attempt to address issues in a manner that
enhances good tax administration. This collaboration requires open and transparent
discussion of the concerns and goals of all IIR team members. Resolution of an IIR
Program request will require multiple and timely exchanges of information, which may
include books and records of specific taxpayers, and meetings. However, because
these activities are not undertaken for the purpose of examination or inspection within
the meaning of section 7605(b), information provided in the context of the IIR Program
will not constitute information furnished as part of an examination or inspection within
the meaning of section 7605(b).
.03. Disclosure of information.

IIR Program requests and any additional information provided by a requestor in
connection with a request are subject to the Freedom of Information Act. All
submissions under the IIR Program will be made available for public inspection and
copying. Submissions, therefore, should not include confidential or taxpayer specific
information that is not intended to be disclosed.

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SECTION 7. SUBMITTING IIR REQUESTS
.01. No required format.

An IIR Program request is not required to be submitted in a particular format.
The submission should, however, include an issue statement, a description of why the
issue is appropriate for the IIR Program, an explanation of the need for guidance, an
estimate of the number of entities affected by the issue, a description of how the
requester relates to those entities, and the name and telephone number of an individual
to contact if additional information is needed. The submission may also include a
recommendation as to how the issue may be resolved.
.02. Where to submit IIR requests.

Interested parties should submit IIR requests by e-mail to IIR@IRS.GOV.

SECTION 8. EFFECT ON OTHER DOCUMENTS

This revenue procedure supersedes Rev. Proc. 2003-36.
SECTION 9. EFFECTIVE DATE
This revenue procedure is effective April 25, 2016.

SECTION 10. PAPERWORK REDUCTION ACT

The collections of information contained in this revenue procedure have been
reviewed and approved by the Office of Management and Budget in accordance
with the Paperwork Reduction Act (44 U.S.C. 3507) under control number 1545-
1837.
An agency may not conduct or sponsor, and a person is not required to respond to, a
collection of information unless the collection of information displays a valid OMB
control number.

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The collections of information in thi s revenue procedure are in Sections 6 and 7.
This information is required to submit a request for the IRS to consider an issue under
the IIR Program and to consider an issue that has been selected for resolution under
the IIR Program. This information will be used to enable the IRS to determine whether
the issue is suitable for resolution under the IIR Program and for resolution of selected
issues. The collections of information are voluntary to obtain a benefit. The likely
respondents are business or other for-profit institutions, exempt organizations,
employee plans, and government entities.

The estimated total annual reporting burden is 2,000 hours.

The estimated annual burden per respondent varies from 4 hours to 200
hours, depending on individual circumstances, with an estimated average of 40
hours. The estimated number of respondents is 50.
The estimated annual frequency of responses is on occasion.

Books or records relating to a collection of information must be retained as long
as the content may become material in the administration of any internal revenue law.
Generally tax returns and tax return information are confidential, as required by 26
U.S.C. 6103.

SECTION 12. CONTACT INFORMATION

The principal author of this revenue procedure is Sarah McLemore of the Office
of Associate Chief Counsel (Procedure and Administration). Ms. McLemore may be
contacted at 202-317-6844 (not a toll free number). For information regarding the IIR
Program, please contact the IIR Senior Program Analyst by email at

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IIR@IRS.GOV. Questions will be routed to the appropriate Operating Division for
response.