Treasury Inspector General for Tax Administration

Office of Audit

ACTIONS ARE BEING TAKEN TO ADDRESS THE IMPACT THAT INTERNATIONAL FINANCIAL REPORTING STANDARDS WILL HAVE ON TAX ADMINISTRATION

Issued on September 8, 2010

Highlights

Highlights of Report Number: 2010-30-112 to the Internal Revenue Service Commissioner for the Large and Mid-Size Business Division.

IMPACT ON TAXPAYERS

One of the Internal Revenue Serviceís (IRS) goals from its Strategic Plan for 2009-2013 is to enforce the law to ensure everyone meets their obligation to pay taxes.The Large and Mid-Size Business Divisionís Strategic Initiatives and Fiscal Year 2009 Priorities also included developing a Servicewide strategy to address the consequences of the expected conversion to the International Financial Reporting Standards (IFRS).The IRS is positioning itself to address the impact that the IFRS will have on tax administration and the taxpayer.

WHY TIGTA DID THE AUDIT

The Large and Mid-Size Business Divisionís Strategic Initiatives and Fiscal Year 2009 Priorities included engaging with tax professionals who provide tax advice on international administrative, technical, and information reporting matters.As part of this strategic initiative, the Large and Mid-Size Business Division planned to identify and monitor emerging issues related to the adoption of the IFRS.This audit was initiated as part of the Fiscal Year 2010 Annual Audit Plan and addresses the major management challenge of Globalization.The overall objective of this review was to assess the IRSís progress to prepare for the tax issues and implications of converting from United States Generally Accepted Accounting Principles to the IFRS.

WHAT TIGTA FOUND

The IRS is in the process of providing awareness training to IRS employees and managers by introducing them to IFRS concepts and potential issues.The IRS also is providing technical advice and guidance to employees conducting examinations of returns filed based on the IFRS.

The IRS appropriately coordinated with the tax practitioner community to outline IFRS implementation concerns.In addition, the IRS is in the process of developing procedures to address significant issues related to the IFRS.

WHAT TIGTA RECOMMENDED

Although TIGTA made no recommendations in this report, IRS officials were provided an opportunity to review the draft report.IRS management did not provide any report comments.

READ THE FULL REPORT

To view the report, including the scope and methodology, go to:

http://www.treas.gov/tigta/auditreports/2010reports/201030112fr.html.

Email Address: ††inquiries@tigta.treas.gov

Phone Number:†† 202-622-6500

Web Site:†† http://www.tigta.gov