Additional Actions Are Needed to Ensure Taxpayer Compliance With the Section 965 Repatriation Tax

The Commissioner, LB&I Division, should prioritize and follow up on the list of nonresponsive taxpayers issued soft letters to determine whether any follow up procedures are appropriate, taking into consideration WEIIC examination priorities.

Revise the CP56 and CP256 notices to add more information on how the Section 965 installment payments should be made. For instance, when making a payment using the EFTPS, the notice should specify how the payments should be made. The notice should also indicate that the taxpayer currently cannot use the debit/credit card payment platform to make Section 965 installment payments.

Ensure that any business requirements developed by the “Section 965 Core Team” systemically identify all Section 965 payments that are applied to TY 2019 or later tax modules so they can be evaluated to determine if they were correctly processed.

Develop procedures to systemically identify taxpayers that made the Section 965(h) deferral election and are not compliant with the required payments.

Develop procedures to identify S Corporation shareholders who made an election under Section 965(i) and who did not annually submit the Form 965-A or did not report the correct amount of the Section 965 deferral on the Form 965-A. The procedures should ensure that the correct processing codes are applied when the deferral is reported on the Form 965-A.