Industry Director Directive on Backdated Stock Options Directive #2
DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
WASHINGTON, D. C. 20224
Large and Mid-Size Division
LMSB Control No. 4-0308-017
Impacted IRM 4.51.5
April 22, 2008
MEMORANDUM FOR: INDUSTRY DIRECTORS
DIRECTOR, PREFILING AND TECHNICAL GUIDANCE
DIRECTOR, INTERNATIONAL COMPLIANCE STRATEGY AND POLICY
FROM: Laura M. Prendergast / s / Laura M. Prendergast
Director, Field Specialists
SUBJECT: Tier I Issue – Backdated Stock Options Directive #2
The Backdated Stock Option (BSO) Issue has been removed from Tier I status and will be designated as a Tier II issue.
Change of Status
The BSO issue was originally designated as Tier I due to intense public and Congressional interest. The level of importance for maintaining Tier I status has diminished as field personnel are now better equipped to identify and examine this issue. Based on the progress of BSO examinations, this issue no longer requires Tier I monitoring and has been moved into Tier II status. Tier II will allow the Issue Management Team (IMT) to assist ongoing examinations through completion and continue to provide field support for the issues.
This directive amends the Tier status and reporting requirements outlined in Directive #1.
Examination Guidance
Issue guidance and support will continue through the LMSB Executive Compensation Technical Advisors and the IMT. Reporting requirements will be eased and no additional BSO Tier I cases will be assigned to the field by the IMT. The following changes will be implemented for the Tier I cases assigned to the field:
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Monthly reporting by the case agent will be eliminated after submission of the April 10, 2008 report.
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A closing report continues to be required upon completion of the examination of the issues.
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Non assertion of penalties continues to require IMT approval prior to any penalty discussion with the taxpayer.
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UIL, Project and Tracking Codes continue to be mandatory and will conform to those outlined in Directive #1.
These requirements will remain in place until all cases assigned to the field have been completed or such time as the Issue Owner Executive issues a directive eliminating these actions.
Contact:
If examiners need further assistance, they should contact the Executive Compensation Technical Advisors.
This Directive is not an official pronouncement of law or the position of the Service and can not be used, cited, or relied upon as such.
cc: Commissioner, LMSB
Deputy Commissioner, Operations
Deputy Commissioner, International
Division Counsel, LMSB
Commissioner, SBSE
Chief, Appeals
Directors, Field Operations
Director, Performance, Quality, Audit Assistance and Service
