Larry Gibbs and Marianna Dyson* discuss several compliance initiatives the IRS will undertake in 2010, including the new global high-wealth industry group and the employment tax national research program (NRP).

According to Larry Gibbs, a major criticism of IRS over the last several years has been that it has relied on “traditional” compliance and enforcement efforts such as audits, collections, and criminal investigations in targeting issues like the tax gap and U.S. persons holding undisclosed foreign bank accounts. “And the reason that these haven't been effective is because a lot of your noncompliance areas—your fraudsters, your tax shelter promoters—are basically looking at where the IRS is and then setting up their activities for where the IRS isn't,” he said. Gibbs said he sees that IRS is starting to look at its compliance enforcement efforts and think outside the box to develop nontraditional compliance initiatives, an effort that has materialized into several burgeoning programs.

Marianna Dyson said that she thinks companies are preparing for the NRP audits through internal reviews. Her firm's clients are trying to retroactively make corrections if they find any errors, she said. Dyson said that her understanding based on casual exchanges with IRS officials is that the service will encourage more voluntary corrections in conjunction with the NRP. She said she thinks employers can be proactive in light of the program and that they can correct some issues using the Forms 941 process, as well as correct their Form W-2 reporting. Some companies are conducting internal reviews of their fringe benefits practice, Dyson said. “But this has brought home the need to bring that effort up,” she said.

*Former Miller & Chevalier attorney