IRS Adds Banking To Industry Issue Resolution Program

by Mike Godfrey, Tax-News.com, Washington

02 August 2004

The Internal Revenue Service and the Treasury Department announced on Friday that tax issues confronting the banking and heavy equipment distributor industries have been selected for the Industry Issue Resolution (IIR) Program.

The banking industry issue involves the way in which lending institutions should determine interest income on “non-performing” loans. There are different book and tax accounting standards for when a loan becomes ‘non-performing’ for purposes of determining interest accruals.

The heavy equipment distributor industry issue involves the valuation of parts inventory. Inventory valuation is a factor that determines the ‘cost-of-goods-sold.’ IRS and the industry will seek to determine a valuation method that reduces burden and provides certainty and consistency for affected taxpayers.

"The IIR program provides clarity and consistency to complex tax issues, while reducing the burden for taxpayers,” explained Large and Midsize Business Commissioner Deborah M. Nolan. “These are issues that can be resolved up front for all affected taxpayers so that they do not become contested issues downstream during tax audits on a case-by-case basis.”

Since its inception in 2000, the IIR program has resulted in resolution of many different tax issues cumulatively affecting thousands of taxpayers in many different lines of business.

Business associations and taxpayers can at any time submit tax issues that they believe could be resolved though the IIR program.

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