Large & Mid-Size Business Division
LMSB International Realignment
NTEU Briefing
DISCUSSION
DOCUMENT
Washington, DC
August 2010
CONFIDENTIAL – DO NOT DISTRIBUTE
Executive Summary
 The IRS has identified increased compliance risk resulting from greater complexity
of international tax laws and business structures
Background
 LMSB International is charged with providing guidance and support within LMSB on
international issues and cases and leading IRS’ service-wide international tax
strategy
 Under the Large Business and International Expansion (LB&IE) Initiative, LMSB
International will be positioned to (1) enhance the IRS’s focus on transfer pricing
and on offshore and international individual compliance, (2) expand its overseas
attaché staff, and (3) develop new international metrics
 Augment and structure International organization to be successful in managing all
service-wide international issues by:
(1) Aligning international strategy with the frontline
Objectives
(2) Consolidating international specialists to optimize knowledge and allocation
of resources
(3) Developing a Transfer Pricing Practice that coordinates closely with APA
 Realign LMSB to realize the vision of strategic issue focus, eliminate geographic
barriers to expertise, improve collaboration between its examiners and policy
makers
2
Highlights of Proposed Change

The name of the Large and Mid-size Business (LMSB) will change on Oct. 1 to the Large Business and
International division (LB&I)

The new LB&I division will realign from Industries and Pre-Filing & Technical Guidance (PFTG). International
specialists and issue specialists, field specialist economists, international technical advisors, and related staff—
approximately 875 employees in total—will move to the existing International organization, reporting to the
Deputy Commissioner, International

The realigned LB&I will continue to serve the same population of taxpayers — corporations, subchapter S
corporations and partnerships with assets greater than $10 million as well as certain high wealth individuals

LB&I will include a transfer pricing director, who will continue piloting the new transfer pricing practice, and a
chief economist, who will oversee the IRS’s economic positions pertaining to transfer pricing

LB&I is also charged with overseeing the implementation of the recently enacted Foreign Account Tax
Compliance Act (FATCA). Signed into law in March, FATCA will substantially improve international information
reporting, increasing international transparency and compliance

Heather C. Maloy will continue serving as Commissioner of LB&I. Michael Danilack, Deputy Commissioner,
International, will head the realigned global unit. Paul D. DeNard will continue serving as Deputy Commissioner
(Operations)
3
LMSB’s current structure illustrates wide dispersal of international specialists
LMSB Organizational Chart – Existing State
LMSB Commissioner
Deputy Commissioner
International
(Total Int’l Staff: ~549)
Deputy Commissioner
Operations
(Total Ops Staff: ~6080)
EEO
CTM
TA&IC 92
JITSIC
2
ICS&P 455
M&F
12
RWI (PSP)86
PQAS 163
BSP
37
PFTG 163
Deputy
Field 1222
Specialists
838
East 458
West 364
East 641
West 565
FS
795
NE
386
Man. 380
Field Organization
Total Staff
Total
International
Staff
International Staff
East
West
NRC
910
HMT
995
FIELD SPECIALISTS
1222
134
76
58
East 451
East 471
CTM
838
142
49
93
West 438
West 501
FS
795
155
150
5
HMT
995
100
61
39
RFPH
805
138
71
67
NRC
910
178
94
84
PFTG
163
28
5728
875
GHW
43
RFPH 805
East 360
West 424
TOTAL
4
The realignment directly responds to challenges in the existing structure
that make it difficult to link international strategy to frontline expertise
Benefits of Realigned LB&I Division
Centralizing international specialists will provide the following
benefits:
Challenges with Existing LMSB
Structure
The current distribution of international
specialists throughout LMSB creates the
following challenges:
 Impeding collaboration and program
management
 Creating geographic barriers to
expertise
 Separating International Examiners
(IEs) from National Office policy
makers
 Preventing the strategic selection of
workload
 Identifying emerging international compliance issues more
quickly
 Removing geographic barriers, allowing for the dedication of
IRS experts to the most pressing international issues
 Increasing international specialization among IRS staff by
creating economies of scale and improving IRS international
coordination
 Ensuring the right compliance resources are allocated to the
right cases
 Consolidating oversight of international information reporting
and implementing new programs, such as the Foreign
Account Tax Compliance Act (FATCA)
 Coordinating the Competent Authority more closely with field
staff that originate cases, especially those dealing with
transfer pricing
 Otherwise centralizing and enhancing the IRS’s focus on
transfer pricing
5
The realigned LB&I international structure will bring IEs, economists, and
other international specialists together, supported by executives
LB&I International Future State Organization
IRS Commissioner
Changes from Current State
1 International specialists and Economists shift to
International to emphasize issue focus
2 Transfer Pricing specialization area includes 482
Issue Specialists, 482 TAs, and a Chief Economist
IRS Deputy
Commissioner for
Services & Enforcement
LB&I
Commissioner
Senior Advisors
1
Deputy Commissioner,
International
Executive Assistant
Director, Int’l
2
Strategy & ServiceWide Coordination
Competent 18
Authority
EOI & 26
JITSIC
1
EA 1
ServiceWide
Strategy
EA 1
2
Director, 2
Transfer
Pricing
Agreement TBD
Coord
Chief
Economist
1
482 TAs
8
Director, Int’l 2
Corporate Taxation
(ICT)
DFO
2
Int’l Corp
Tax East
DFO
2
Int’l Corp
Tax West
Territories
Territories
Territories 385
Territories
Economists
East
482 Issue 47
Specialists
76
EA 1
Int’l Corporate 2
Tax Strategy
Territories
Territories
Territories 293
Territories
Economists
West
58
Foreign 41
Payments
Int’l 18
TAs
Deputy, Int’l 2
Individual Tax
Director, Int’l 2
Individual Taxation
(IIT)
Campus 45
Compliance
Unit
Terr Mgr 66
Territory 1
Int’l Individual12
Tax Strategy
IOC / FRC
GHW
Terr Mgr 80
Territory 2
Terr Mgr 64
Territory 3
Terr Mgr 36
Territory 4
Terr Mgr 74
Territory 5
6
The realignment will impact International Examiners and specialists,
though most impacted employees will remain in their current group
Details on Employee Impact
Impacted employees are those assigned to the following Standard Position Descriptions (SPDs):
– 91987 - GS-512-12 International Examiner
– 91983 - GS-512-13 International Examiner
– 96628 - GS-512-14 International Issue Specialist
– 94734 - GS-512-14 Senior International Examiner

Most of the impacted employees will remain in their current group and the group will be
realigned in its entirety

Employees who are currently in blended groups comprised of both domestic agents and IEs
may be realigned to a different group:

–
If IEs are in a blended group, they will be realigned to an International group
–
If domestic agents are in a blended group which is managed by a team manager who is
assigned to an International team manager SPD, the domestic agents will be realigned
to a domestic group and remain in their current industry
International examiners will no longer control cases.
7
The realignment will impact International Examiners and specialists,
though most impacted employees will remain in their current group
(cont.)
Additional Details on Employee Impact

LMSB foresees no change to employees' workstations, PODs, SPDs (other than organizational
locations) or critical job elements as a result of this initiative. Flexi-place and AWS
arrangements will likewise remain unchanged

Two domestic groups in Manhattan, Group 1031 and Group 1197, currently part of the
Financial Services Industry, will be realigned to the International organization due to the
specialized work they do related to qualified intermediaries and withholding respectively. They
will function as they do currently and will continue to control their case work

LMSB's Economists, who currently are part of the Field Specialist organization, will be
realigned to International, due to the fact that more than 90% of their work is international in
nature. Their realignment will provide a uniform and consistent approach to international
issues. The two current Economist territories will be realigned in tact under a new executive

The support staff who are assigned to any of the above impacted groups will be realigned with
their groups
8
Several pending decisions related to the international realignment are
still being considered
Description of Pending Decisions
 Migration of International Examiners and Specialists in Non-IE Groups: We are still
determining the process and criteria for deciding where and how to migrate international
examiners and other international specialists who currently reside in blended groups, including
those in the Global High Wealth Industry (Article 15, Section 2A.1)
 Transition of IE Case Control for Current Inventory: We are still determining how to best
transfer and complete cases that international examiners are currently controlling
 Any other potential issues identified during the briefing
9