Cost sharing has been a part of IRS regulations since 1994, but only this summer has the IRS developed an audit program for its international examiners and field specialists. In August, the IRS issued its first checklist for use by international examiners and field specialists (both to be referred to herein as IEs) to use in examining cost sharing arrangements (CSA). IEs will use the document to assess the taxpayer's treatment of the issue and as a guide in determining whether the cost sharing documentation submitted by the taxpayer complies with the contemporaneous documentation requirements of Treas. Reg. Sec. 1.482-7(j)(2) and the IRC 6662(e) penalty regulations.
The checklist consists of eight sections or "sets." Each set corresponds to one of the stated requirements as set forth in the regulations in 1.482-7. (The IRS also issued proposed changes to the cost sharing regulations on August 22, 2005. Those proposed regulations will be the subject of a forthcoming
