Changes to Tax Examinations: IRS LB&I’s Updated Directives

The Large Business and International (LB&I) Division has announced significant modifications to its examination process, outlined in a recent memorandum effective August 1, 2025. These changes are intended to foster more efficient and effective examinations, enhance taxpayer service, and promote collaborative issue resolution. This article will delve into the procedural updates concerning the elimination of the Acknowledgment of Facts (AOF) Information Document Request (IDR), the updated Fast Track Settlements (FTS) pilot program, and clarifications regarding the applicability of Accelerated Issue Resolution (AIR) to Large Corporate Compliance (LCC) cases.

A notable change is the elimination of the AOF IDR process, with full elimination scheduled for 2026. While the AOF process is slated for elimination in 2026, a transition period is in effect until December 31, 2025. During this period, all in-progress and newly initiated cases will continue to offer the AOF process as an option for the taxpayer to elect or decline, with the decision and discussion documented in the case activity record. Despite the AOF’s elimination, the core value of collaborative examinations remains unchanged.

For more information on changes to tax examinations see Ed Zollars “Changes to Tax Examinations: IRS LB&I’s Updated Directives,” Current Federal Tax Developments, July 25, 2025. 

Special thanks to Mark J. Bade (CPA, GCMA, St. Louis, Missouri) for bringing this article to my attention.