IRC 6103 (b)(3) 3. Has each individual filed a return for the year of expatriation and each year subsequent to expatriation? See Enclosure II, Column 5. 4. Please report the tax remitted by each individual for the year of expatriation and each year subsequent to expatriation. See Enclosure II, Column 7. All of these individuals have paid their tax balances on filed returns except for. IRC 6103 (b)(3) 5. Has the IRS audited any of these returns for compliance with Section 877? Enclosure II, Column 8 identifies cases selected and not selected for examination. We determine expatriation status during the course of the examination and taxpayer interview. Compliance with § 877 is a component of the "full compliance" check performed in all examinations. 6. For the individuals not covered in the letter of September 16, 2002, please We have provided summaries for those cases in the possession of Compliance Area 15. We will provide additional summaries as we retrieve cases from record retention. 7. The May 5, 2000, letter stated that the IRS routinely "conducts a check of the average tax for the five-year period prior to expatriation as part" of your review process. Please provide the five-year average income tax liability for the five years preceding expatriation for each individual referenced in your letter of August 14, 2002. See Enclosure II, Column 4. 8. The August 14, 2002, letter provided information on all of the individuals individuals. The following facts are contained in a ruling request submitted. FOR OFFICIAL USE ONLY Requests for additional information arising during the conference call of September 23, 2002 1. Page 13 of the September 20, 2002, letter indicates that the Philadelphia Service Center has drafted first, second, and third notices, along with a Form 886E, "Explanation of Requested Items, "which are to be issued to expatriates regarding their filing requirements, penalty issues, and information that they may have omitted on their Form 8854. We would like to have copies of these proposed notices and the Form 886E. See Enclosures III (a)- (d). As part of the program move from our field office to the Philadelphia campus, our Compliance operation is developing policies and procedures for working these expatriate cases. These letters represent a first draft of the type of letters we might send taxpayers to gather additional information. 2. Please provide us with a flow chart, or schematic, detailing the flow of information relating to expatriates into the IRS and within the IRS. For example, it is our understanding based on recent correspondence and conversations with IRS personnel that letter ruling requests go to the National Office. Rulings determinations by the National Office are sent to Philadelphia Service Center for entry into the CLN database. Separately, the Department of State collects CLNS and forwards them to the Philadelphia Service Center for entry into the CLN database. The flowchart should show this information flow and other expatriate related information flows within the IRS and to other government agencies. We are reviewing the flow chart of this process and will forward it to you at a later date. FOR OFFICIAL USE ONLY IRC 6103 (b)(3) 3. The IRS indicated that, in the past, some compliance initiatives related to expatriating individuals were initiated as the result of other compliance efforts, such as tax shelter investigations. It was indicated that perhaps 12 investigations were initiated related to expatriaung individuals in 1999. Please provide us with detailed information relating to these cases, including a description of each initiative, how individuals were identified as potentially subject to the expatriation tax rules under these initiatives, the nature and status of these cases, and the handling of oversight of these cases. We may select expatriated taxpayers whose accounts fall into high-risk categories for exam. I hope this information answers your questions. If you have any questions, please contact me at (202) 622-3720. |