Market Segment Specialization Program

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Background

The Market Segment Specialization Program (MSSP) is an Examination program created by the Internal Revenue Service under the umbrella of Compliance 2000. MSSP calls for increasing the level of examiners by establishing teams to conduct an in-depth, internal study of a particular market segment and using that knowledge to develop guidelines specific to the business environment. The IRS believes that this program will ultimately allow it to work with the representatives of the market segments to make compliance with the tax laws easier to understand and easier to do.

Program Mechanics

An industry, issue or profession, that is, a market segment, is selected by the Chief, Examination Division, with input from examiners, managers, other functions and branch chiefs. MSSP teams will be created on an as-need basis, as determined by each district, and will consist of examiners who have expressed an interest in specializing and tailoring their expertise to a particular market segment.

The MSSP teams will thoroughly research and develop the methods of operation of a particular market segment. They will screen tax returns representing its market segment, establish the criteria for selecting returns for audit and perform case examinations with the help of the other functions. After the MSSP team completes its research and development of methods of operation and completes its case examination processes, it will compare its notes and information, discuss the issue and write an audit technique guide to be used by examiners in future audits.

A coordinator for each of the market segments that have been identified and for which an audit technique guide has been issued will be appointed by the IRS. The coordinator will periodically review the guidelines to see if any revisions are necessary. If an examiner in the field encounters a situation that is not covered under that particular market segment's audit technique guide, those findings will be forwarded to the coordinator for possible inclusion in the guidelines.

Audit Technique Guides

Audit technique guides are manuals developed by MSSP teams that IRS examiners will use as training materials designed to help them do a better job when called upon to audit a specific industry, issue or profession. The guidelines help the examiners become "specialists" in the areas they are auditing. By releasing the audit technique guides, the IRS hopes to increase voluntary compliance among taxpayers by educating them in advance. Although the number of audit technique guides released are limited, the IRS plans to release external versions of its audit technique guides for each of approximately 80 market segments included under the program in the future.

Note: Each audit technique guide carries the warning that under no circumstances should it be used or cited as authority for setting or sustaining a technical position.

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