The IRS announced last week  that it has begun using an automated data analytics program for identifying the largest and most complex corporate taxpayers. This new Large Corporate Compliance (LCC) program replaces the Coordinated Industry Case (CIC) program and covers compliance oversight for The Large Business and International (LB&I) Division’s largest corporate taxpayers. The LCC employs automatic application of criteria such as gross assets and gross receipts to determine the LCC population. In the past, CIC identification was done by manually assigning points to seven categories: gross assets, gross receipts, operating entities, multiple-industry status, total foreign assets, total related transactions and foreign tax.  Based on parameters in the Internal Revenue Manual, points were assigned to each category, and an aggregate score of 12 or more identified a taxpayer for CIC. The new LCC automated computer analysis replaces the old CIC manual selection process. After the taxpayers are identified by the new LCC computer analysis, data analytics are used to identify the returns that pose the highest compliance risk.
We asked the IRS Stakeholder Liaison for additional details as to what range of gross receipts and/or gross assets would identify a taxpayer through the LCC program. No further information is available at this time due to the newness of the program, but more information is expected to be coming in the weeks ahead.
The IRS Criminal Investigation (CI) division also announced a recent data analytics push, including hiring 10 data scientists and assigning data analysts to each of CI’s field offices. CI is combing IRS data along with publicly available data, including public records, motor vehicle registrations and more.
How Does Data Search Expansion Affect Small Business?
While these new initiatives based on data and data analytics appear to be limited to the largest corporate taxpayers and criminal investigations it remains to be seen how new data analysis programs and tools will be used in Small Business/Self-Employed (SBSE) cases, and other Large Business & International (LB&I) cases. With a decreasing employee headcount, the IRS is certainly trying to automate as many functions as possible, including audit selection, compliance checks and collections. A database full of decades of computerized tax return information and a continuously increasing amount of public records available online could pave the way for the IRS to further refine and automate its tools to focus on tax returns with the greatest perceived potential for adjustment and taxpayers with the highest risk of noncompliance.
For more information please contact your Eide Bailly professional.
 See IRS news release at: https://www.irs.gov/newsroom/lbi-announces-large-corporate-compliance-program
 Internal Revenue Manual (IRM) 126.96.36.199
 IRM Exhibit 4.46.2-2