End of Tier I Program for R&D Credit

The IRS released a statement on August 17 that it is ending its tiered issue program which includes the R&D tax credit, and will turn over review of previously listed issues to the newly organized issue practice groups (IPGs) and international practice networks (IPNs).

The new IPGs and IPNs are focused on building internal knowledge management that can deliver more decentralized technical advice to exam teams. The intentional integration of collaborative information sharing into the groups’ design is meant to “balance the need for consistency with the recognition that there is no ‘one size fits all’ approach,” according to the directive. As a result, the directive says, all prior directives referencing tiered issues “are withdrawn and should no longer be consulted or followed,” and other internal guidance addressing the program (such as Internal Revenue Manual references) “are no longer valid.”

In effect, official guidance from the Tech Advisors issued in conjunction with Tier I topics are not to be followed going forward. It remains unclear whether advise rendered on existing cases will be followed in resolving current exams, such as guidance on the R&D credit in the form of position papers and mandatory IDRs.


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