On July 25, 2025, the IRS’s Large Business & International (LB&I) division released a memorandum outlining new interim guidance intended to streamline its examination process and foster better collaboration with taxpayers. The guidance, part of the IRS’s ongoing efforts to modernize and improve audit efficiency, is designed to reduce case cycle times while ensuring that issues are resolved fairly and consistently.
A key element of the memorandum is the phase‑out of the “Acknowledgment of Facts” (AOF) process, which currently requires taxpayers to sign off on exam findings before a case can proceed. This step has often delayed cases; under the new guidance, it will be discontinued by 2026, allowing exams to move forward more quickly.
The memorandum also expands the Accelerated Issue Resolution (AIR) program, which was previously limited to smaller or less complex cases. Starting immediately, large corporate taxpayers will have greater access to AIR, enabling them to resolve specific issues more rapidly during an audit rather than waiting until the end of the examination. This change should help prevent disputes from dragging on for months or years, thereby freeing up resources on both sides.
Finally, the guidance introduces an additional level of review for Fast Track Settlement (FTS) requests. IRS managers will now examine any proposed denial of FTS to ensure that taxpayers receive a fair opportunity to resolve disputes through the expedited settlement process. This added oversight is intended to encourage exam teams to consider alternative resolution strategies before moving forward with traditional appeals.
Together, these changes signal a significant shift in how the IRS plans to handle large business examinations. By emphasizing early issue resolution and more consistent oversight, the LB&I division hopes to reduce the burden on taxpayers and streamline audit processes. Companies subject to LB&I examinations should familiarize themselves with these new procedures and consult their tax advisors about how the changes may affect ongoing or future audits.
If you would like to discuss how this guidance might impact your business, or if you are currently undergoing an LB&I examination. Contact our team for more information and assistance.