The Issue Focus Approach After One Year: Can LMSB Steer Clear of the Shelter Paradigm? (Large and Mid-Sized Business‪)‬

Introduction In the spring of 2007, the IRS's Large and Mid-Sized Business Division (LMSB) announced its "Industry Issue Focus" approach to the selection of issues for examinations. (1) Now that LMSB and taxpayers have had the benefit of a full year of experience with the new approach, it is appropriate to evaluate the approach, which has become the cornerstone of the LMSB enforcement strategy. LMSB has modified the program slightly and has sought to modify the messaging about what the program means. This article discusses the changes to the IIF program, reviews comments and criticisms of the approach, and presents LMSB management's response to those comments. It then discusses options and strategies for resolving controversies involving these issues.