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July 11, 2014
Koskinen Denies Any Change of Focus at LB&I
by Andrew Velarde

Full Text Published by Tax Analysts®

Despite several recent departures of high-ranking officials from the IRS Large Business and International Division, IRS Commissioner John Koskinen insisted on July 9 that the resignations do not indicate a change in the Service's focus on international tax issues.

"Clearly everybody is globalizing. International issues are becoming more significant rather than less, in terms of tax compliance [and] tax review," said Koskinen, speaking with reporters following a House Oversight and Government Reform Government Operations Subcommittee hearing. "The reorganization and restructuring that has been going on has been going on for about a year and a half . . . so there's nothing precipitous that has happened right now."

Koskinen said Michael Danilack, who stepped down as LB&I deputy commissioner (international) on July 2, and LB&I Commissioner Heather Maloy had been working the past year and a half to efficiently integrate international and domestic auditing. Koskinen added that he had also talked with John Dalrymple, IRS deputy commissioner for services and enforcement, to ensure that nothing else was amiss.

Koskinen said that while the resignations were a loss to the IRS, in all but perhaps one case the employees had planned and previously announced an intention to leave the division.

"They had been [with the division] three, four, five years. They come from outside the agency. Mike Danilack was that way. He had been there four and a half years and had announced that he was thinking about leaving," Koskinen said. "Sam[uel] Maruca, [transfer pricing director], was that way -- he had always said he was leaving sometime between the summer and the fall."

Maruca and Diana Wollman, director of international strategy, announced their resignations on July 1. Richard McAlonan, advance pricing and mutual agreement program director, left June 27 after announcing his departure in the spring.

Asked whether Danilack's departure might have something to do with his lack of direct access to the commissioner, Koskinen dismissed that possibility, saying that he had met with Danilack "probably a dozen times" since January.

Expanding the IPN System?

Koskinen also said the "knowledge-sharing development process" of international practice networks (IPNs) implemented in international auditing has proven beneficial, adding that such a process could be useful for the agency as a whole. He specified that the Service may look to expand the IPNs beyond LB&I's international side to the rest of the division.

"One of our concerns everywhere is we have a lot of people eligible to retire. When they leave they take a lot of information and experience with them," Koskinen said. "What the international group has been working on is knowledge sharing, knowledge development, so when somebody leaves, the knowledge base is still available to everybody."

In 2012 the IRS eliminated its tiered issue process and replaced it with a knowledge management system, which includes IPNs. Rather than direct agents on how to proceed with a taxpayer examination, the 18 IPNs are designed to facilitate networking and information sharing and to connect agents with expertise from across the agency. Practitioners have previously expressed concern over IPNs' lack of transparency.

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