IRS Targets Transition Tax in Audit Campaign
2019 – 11/12 The IRS Large Business and International (LB&I) division has announced that it will begin targeting compliance with a transition tax in one of its new audit campaigns. The initiative involves Section 965, which was added by the Tax Cuts and Jobs Act. Under Sec. 965, U.S. shareholders are required to pay a transition tax on the untaxed foreign earnings of certain specified foreign corporations as if those earnings had been repatriated to the U.S. As part of the new LB&I campaign, auditors will identify taxpayers at risk and begin by examining 2017 tax returns. However, taxpayers chosen for audit will probably have both 2017 and 2018 returns examined, the IRS stated.