IRS issues guidance regarding information document request contents.

On June 3,1996, in response to an AICPA request, the IRS issued guidance to all Regional Chief Compliance Officers on the contents of the Service's Information Document Requests (IDRs).

On Oct. 31, 1995, the AICPA's Tax Practice and Procedures Committee submitted to IRS National Office executives several examples of IDRs that were overly broad and unfocused. On May 10, 1996, the AICPA followed up with correspondence to David Harris, Director, Coordinated Examination Program, requesting that guidance be issued to address these type of requests. As a result of that correspondence, Thomas Smith, Assistant Commissioner (Examinations), issued a memorandum to all Regional Chief Compliance Officers related to improving the IDR process when requesting collateral information. Mr. Smith stressed the importance of the IDR process to the overall success of the Large Corporate Examination Program.

The memorandum provides the following specific guidance to all revenue agents:

[] Involve the taxpayer in the IDR process and the determination of a response time for requests.

[] Discuss the contents of an IDR prior to its issuance, or at least at the time of issuance, to seek clarification and solicit possible alternative methods of meeting the IDR objective in a more efficient manner.

[] Refrain from issuing overly broad IDRs and focus IDRs on specific information needed to examine identified areas.

[] Issue "draft" IDRs when requesting collateral information, such as Internal Audit Reports, management letters, engagement letters or representation letters.

[] Discuss with the taxpayer the specific identified issue(s) or reason(s) for requesting these documents.

The aim of this guidance is to eliminate the "shotgun" approach of issuing overly broad and unfocused IDRs. Additionally, the guidance will facilitate the examination team's conclusion of the audit, make the information gathering process more efficient, facilitate the issuance of fewer and more concise IDRs, generate a more timely response to those IDRs that are issued, and reduce taxpayer burden.

Practitioners should be aware of this guidance and review the appropriateness of an IDR with an eye toward reducing a client's information-gathering burden, especially when an IDR requests collateral information that extends beyond identified issues.

FROM BRUCE K. GRIBENS, J.D., CPA, DELOITTE & TOUCHE LLP, WASHINGTON, D.C.