Memo removes IRS procedural requirements for economic substance arguments
The IRS issued a memorandum to all Large Business & International Division and Small Business/Self-Employed Division examination employees to communicate updated guidance for examiners and managers on the economic substance doctrine and related penalties. The memorandum makes it easier for the IRS to assert that a transaction lacks economic substance or a business purpose by removing the previously required four-step process for relying on the economic substance doctrine, including the requirement for executive approval.