Dave Macias, Jennifer LiJune 21, 2012

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• Planning• Analysis• Inventory• &Research

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Audit complex financial instruments (derivatives, debt)

Examines structured transactions (CARDS, Son of Boss, Foreign Tax Credit Generator, etc)

Works with all divisions in IRS (LB&I, SBSE, W&I, TE/GE)

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1. SME’s create filters with guidance from FDRA.

2. Assign a risk score to each filter.3. Build Financial Products filters

using Blaze Advisor.4. Validate filters by inspecting sample

returns.5. Aggregate risk scores to determine

HRR. 6. Send information reports to the

field.7. Collect feedback from field

personnel.

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Debt / Equity Risk Level

>5 and < 10 1

>= 10 < 20 2

>= 20 < 30 3

>= 30 < 40 4

Over 40 5

Hypothetical but representative

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Filter Risk Level Weight Filter Score

A 3 2 6

B 5 1 5

C 1 4 4

D 2 5 10

E 4 1 4

Total Return Score 29

Hypothetical but representative

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RulesRepository

Infrastructure Blaze Advisor

Application Server

Developing

& Modifying

Managing

Deploying

Deployment Manager

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Development

if theObject.intestExpens > Ten_Millionsthen rank(theReturn.interestExpense);

Financial Products Rules Repository

Rules Service

Batch Application

Rule Developer

Testing

Production

SMEs

RulesRepository

I am interested to see the interest expense above 10 millions

QA / QCProcesses

Hypothetical but representative

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Risk Scores Distribution

Score0

74%

Score31-60 4%

Score11-30 5%

Score61-100

1%

Score1-10 16%

Hypothetical but representative

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RMA FP Weight/Rank Setting

Hypothetical but representative

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A Rule Flow in Blaze Advisor

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Rule Flow of Form 1120 Rulesets

1120 1120M3 5472 8858 8916A 8886

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RMA Switch Board for Rule Output

For questions and feedback, please send email to

Dave.Macias@irs.gov / jennifer.li2@irs.gov

This presentation was last updated as of 5/31/2012