4.63.1. Overview of the Withholding Exchange & Individual International Compliance (WEIIC) Practice Area

(1) The WEIIC Practice Area serves the following taxpayers or stakeholders:

• U.S. persons living or working abroad

• U.S. persons living or working in a U.S. territory

• Some U.S. persons who hold income producing assets in a foreign country or claim the foreign earned income exclusion or foreign tax credit

• U.S. persons participating in Voluntary Compliance Initiative (Offshore and Domestic)

• Foreign persons who have a U.S. filing requirement

• Withholding agents who have responsibility to report and withhold under chapters 3 (IRC Sections 1441-1446 and 1461-1464) and chapter 4 (IRC Sections 1471-1474)

• Non-resident aliens or foreign corporations with claims for refunds or credits under chapters 3 (IRC Sections 1441-1446 and 1461-1464) and chapter 4 (IRC Sections 1471-1474)

• Tax Information Exchange Agreement (TIEA) partners

• Foreign tax authorities

(2) The WEIIC Practice Area is comprised of three program areas:

1. International Individual Compliance (IIC) field operations includes examination territories and Compliance Support Development & Communication (CSDC).

2. Exchange and Offshore Strategy (EOS) includes Exchange of Information (EOI), Offshore Compliance Initiatives (OCI), Joint International Taskforce on Shared Intelligence and Collaboration (JITSIC), WEIIC Practice Networks (PN) (Inbound and Outbound), and WEIIC Planning and Specials Programs (PSP).

3. Foreign Payments Practice and Automatic Exchange of Information (FPP & AEOI) field operations includes examination territories, Central Withholding Agreements (CWA), Foreign Account Tax Compliance Act (FATCA), Qualified Intermediaries (QI), Planning and Analysis (P&A), Withholding and Credits (W&C), and Automatic Exchange of Information (AEOI).

(3) The goals of WEIIC align with the LB&I strategic goal to apply the tax laws with integrity and fairness through a highly skilled and satisfied workforce, in an environment of inclusion where each employee can make a maximum contribution to the mission of the team. Additionally, each program area aligned under WEIIC has its own program area level goals that supplement the WEIIC and LB&I level goals.

(4) The Withholding and International Individual Compliance (WIIC) Practice Area stood up in February 2016. In November 2020, as part of a realignment of programs, WIIC added Exchange of Information responsibilities and changed its name to Withholding, Exchange and International Individual Compliance (WEIIC). This IRM chapter 4.63 is devoted to the WEIIC Practice Network program area focusing on Withholding and International Individual Compliance. Exchange of Information procedures are contained in IRM 4.60.1.

(1) IRM 1.2.63, Division Delegations of Authority for Large Business and International provides authority relating to the Large Business and International Division.

(2) IRM 1.2.2.5, Delegation of Authority for the Examining Process and IRM 1.2.2.6, Delegations of Authority for the Collecting Process.

(3) IRM 4.10, Examination of Returns, provides the basic procedures, guidelines, and requirements for use by revenue agents and tax auditors in conducting income tax examinations. Additional procedures for LB&I cases are found in IRM 4.46, LB&I Examination Process.

(4) IRM 4.10.21, U.S. Withholding Agent Examinations - Form 1042, provides basic concepts of U.S. source income which is subject to reporting and withholding under IRC 1441-1443 when paid to foreign persons. It also provides general guidance on examining Form 1042, Annual Withholding Tax Return of U.S. Source Income of Foreign Persons, with respect to nonresident alien (NRA) withholding.

(5) IRM 4.60.1, Exchange of Information, provides guidance on sharing of tax related information between two or more countries for tax administration and enforcement.

(6) IRM 4.63.2, LB&I WEIIC Practice Network Knowledge Management, describes practice network structure, the members and their respective roles and responsibilities as part of WEIIC.

(7) IRM 4.63.3, Offshore Voluntary Disclosure Program, Streamlined Filing Compliance Procedures and Voluntary Disclosure Practice, includes information on the Streamlined Filing Compliance Procedures (Streamlined Procedures), the Offshore Voluntary Disclosure Program (OVDP) Transition, and the Voluntary Disclosure Practice (Post OVDP).

(8) IRM 4.63.4, International Individual Compliance Examination Procedures, provides specific procedures, guidelines, and requirements for use by examiners in conducting income tax examinations on IIC cases.

(9) IRM 4.64.1, Case Development and Processing Guidelines, provides authority, guidance, and procedures for the Central Withholding Agreement (CWA) program.

(10) IRM 1.1.24, Large Business and International Division, contains the functional statements and responsibilities of the offices within the Large Business and International Division.

(1) The WEIIC Director is responsible for the development, implementation and oversight of the foreign payments, international individual compliance, exchange of information, offshore compliance functions, and related supporting program initiatives.

(1) Program Reports: The WEIIC Director prepares periodic briefing reports for the LB&I commissioner focusing on:

• Significant accomplishments and opportunities for improvement

• Changes in programs that have been implemented

• Identifying future improvements

• Any other key information

(2) Program managers report progress on their respective program area level projects to the director of field operations, WEIIC practice area. Team managers provide progress reports on their team level projects to their respective program managers.

(3) Program Effectiveness: The efficiency of WEIIC is measured through combined business results of the teams that comprise the WEIIC practice area.

(1) The WEIIC Director is responsible for providing compiled director’s briefings for the LB&I commissioner to identify goals and accomplishments of each program area.

(1) The table lists commonly used acronyms and their definitions:

(1) For information regarding the WEIIC Practice Area international individual compliance strategies and program initiatives, refer to the WEIIC website https://irsgov.sharepoint.com/sites/LBI/Lists/LBIOrgs/DispItemForm.aspx?ID=16, LB&I Organizations - Withholding Exchange and International Individual Compliance (sharepoint.com).

(2) For information regarding the Practice Networks (PN) structure, members and their respective roles and responsibilities, see IRM 4.63.2 , LB&I WEIIC Practice Network Knowledge Management.

(3) For information regarding the International Individual Compliance (IIC) field operations structure, members and their respective roles and responsibilities, visit https://irsgov.sharepoint.com/sites/LBI/SitePages/ADCI212.aspx, International Individual Compliance (IIC) Field Operations (sharepoint.com).

(4) For information regarding the Offshore Compliance Initiatives (OCI) structure, members and their respective roles and responsibilities, visit https://irsgov.sharepoint.com/sites/LBI/SitePages/ADCI31.aspx.

(5) For information regarding the Foreign Payments Practice and Automatic Exchange of Information (FPP & AEOI) field operations structure, members and their respective roles and responsibilities, visit https://irsgov.sharepoint.com/sites/LBI/SitePages/ADCI211.aspx for FPP and https://irsgov.sharepoint.com/sites/ETD-KMT-KB110/SitePages/Locator%20Tools/FATCA/Guidance%20from%20AEOI%20Office.aspx for AEOI.

(6) For information regarding the Exchange and Offshore Strategy Compliance (EOS) field operations structure, members and their respective roles and responsibilities, visit https://irsgov.sharepoint.com/sites/LBI/001/LB&I_Organization_Chart.pdf and https://irsgov.sharepoint.com/sites/LBI/SitePages/Global-LB&I-Information-Resources.aspx.

(7) For information regarding the LB&I examination process, see IRM 4.46, LB&I Examination Process.

(8) For information regarding the basic procedures, guidelines, and requirements used by revenue agents and tax auditors in conducting income tax examinations, see IRM 4.10, Examination of Returns.

(9) To recommend changes or to make any other suggestions to this IRM section, contact the IRM author or see SPDER’s IMD Contacts list by referencing guidelines provided in IRM 1.11.6.5 , Providing Feedback About an IRM Section - Outside of Clearance. A request or inquiry can also be made at https://irsgov.sharepoint.com/sites/PolicyGateway/SitePages/Large-Business-and-International-Policy-Gateway.aspx

(1) The EOI program administers and coordinates all exchanges of tax-related information between the U.S. and international jurisdictions under the provisions of international exchange agreements (including bilateral tax treaties, bilateral Tax Information Exchange Agreements (TIEAs), and multilateral exchange treaties and agreements), except for:

1. Transfer pricing and mutual agreement proceedings administered by APMA

2. Automatic exchanges of information administered by the AEOI program, see IRM 4.63.1.5

3. Certain exchanges relating to cross-border tax avoidance schemes administered by JITSIC, see IRM 4.63.1.4.2

(2) Other responsibilities of EOI include:

1. Facilitating exchanges conducted during simultaneous examinations and simultaneous criminal investigations involving the IRS and one or more foreign tax administrations (through the Simultaneous Examination and Simultaneous Criminal Investigation programs)

2. Coordinating requests for the collection of taxes due to the IRS or a foreign tax administration under the provisions of bilateral tax treaties (through the Mutual Collection Assistance Request program)

3. Coordinating the transmittal of tax returns and return information to the Department of Justice to fulfill requests for records received from foreign jurisdictions under the provisions of Mutual Legal Assistance Treaties

(3) For more information on the EOI Program, please see IRM 4.60.1, Exchange of Information.

(1) The Offshore Compliance Initiatives (OCI) office promotes voluntary compliance with U.S. tax and foreign information reporting laws through strategic enforcement actions directed at identifying U.S. taxpayers involved in abusive offshore tax schemes. In addition, OCI focuses on banks, other financial institutions and third parties that provide, facilitate, or enable offshore financial arrangements and structures. OCI also conducts information gathering and data analysis activities to identify promoters or facilitators of abusive offshore schemes for compliance activities, participates in international forums for improving voluntary compliance, sharing best practices, and leveraging resources, focuses on taxpayers who did not report offshore activity through application of tax treaties and provides technical and procedural guidance on international issues associated with offshore arrangements.

(2) OCI also includes the Joint International Taskforce on Shared Intelligence and Cooperation (JITSIC). JITSIC is a global network of national tax administrations, facilitating, and operationalizing the sharing of intelligence and working together to tackle operational risks in tax administration focusing on abusive transactions.

(1) The WEIIC Inbound and Outbound Practice Networks (PN) develop campaigns and provide training and technical support for field teams on individual inbound and outbound transactions as well as transactions involving digital assets.

(2) The WEIIC PN office focuses on compliance issues related to international individual outbound transactions and international individual inbound transactions as well as transactions involving digital assets.

(3) The WEIIC Practice Area includes the following PNs:

1. Foreign Entities: The Foreign Entities PN considers how U.S. persons with ownership in a foreign entity, such as a controlled foreign corporation, a passive foreign investment company or a foreign pass-thru entity (including foreign partnerships, foreign trusts, and foreign disregarded entities), may need to report their ownership and may also be subject to current U.S. tax on the income earned by that entity.

2. Foreign Tax Credit: The Foreign Tax Credit PN deals with how a U.S. taxpayer (U.S. citizens, resident aliens, and in very rare cases nonresident aliens) can claim a foreign tax credit on their U.S. individual income tax returns.

3. Jurisdiction to Tax - Outbound: The Jurisdiction to Tax - Outbound PN considers U.S. taxpayers (U.S. citizens or resident aliens) whose activities generate income that is sourced outside the United States.

4. Offshore Arrangements: The Offshore Arrangements PN addresses the activities of U.S. individuals (U.S. citizens and resident aliens) using offshore banking, offshore merchant accounts, foreign entities, nominees, other arrangements and schemes, and digital assets to conceal income and ownership of assets to avoid or evade U.S. taxes. This PN also addresses issues related to the reporting of foreign financial assets under Titles 26 and 31.

5. U.S. Business Activities: The U.S. Business Activities PN considers the business activities of nonresident alien (NRA) individuals. Business activities can include being engaged in a U.S. trade or business (USTB) and the income and expenses effectively connected with a USTB.

6. Withholding: The Withholding (WIT) PN considers situations where foreign persons engage in U.S. investment activities and the related U.S. withholding tax requirements on income from those investments. The strategic priorities of the WIT PN are to collect the tax before the assets leave the U.S. and apply to two categories of taxpayers: 1) those making payments to others (payers) and 2) those receiving payments from others (payees). The U.S. imposes these withholding taxes as a vehicle to encourage a foreign person’s voluntary compliance.

(1) Planning and Special Programs (PSP) is responsible for the identification, classification, risk assessment, and return delivery of the IIC filing population. It supports the field teams with inventory and workflow by monitoring actual performance against the compliance plan and providing updates and status reports necessary to allocate time and resources properly. PSP responsibilities include:

• Claims processing

• Compliance functional automation support

• Exchange of information screening and examination

• FinCEN information requests

• Operation assistance requests (OARs)

• Competent authority determination/disposition memorandum

• Collaboration with the issue practice networks on issues developed

• Consultations on development of new workstreams