Service position, as a general rule, is initially determined in published guidance, which includes regulations (including proposed regulations), revenue rulings, revenue procedures, and notices and announcements published in the Internal Revenue Bulletin. It is important that all documents issued by the Office reflect service positions where it is unclear whether a published position covers a particular situation, the Associate Office with responsibility for the guidance at issue should be consulted.

The Office of Chief Counsel will also occasionally transmit procedural guidance or litigating positions through Chief Counsel notices, litigation guideline memoranda (LGMs), or other documents. While such documents are not approved by the Commissioner, and, thus, cannot be relied upon by taxpayers as a statement of Service position, they should not be disregarded by Chief Counsel attorneys. Where it is unclear whether positions set forth in the documents cover a particular situation, the Associate office that issued the document should be consulted.

Similarly, Technical Advice Memoranda (TAMs) and Private Letter Rulings (PLRs) can only be relied upon by the particular taxpayer whose case they address. Although not precedential, such documents should be reviewed for discussions of legal analysis as applied to particular factual scenarios. Consultation with the Associate office is appropriate prior to taking a position that appears contrary to the position taken in the TAM or PLR.

In some instances the terms "policy" and " position" are used in documents interchangeably. Normally, the use of the word "policy" within the Service is confined to those matters in which the Commissioner exercises discretion or has an established policy statement on the matter in question. Thus, the term " policy" should not be used unless the reference is to a matter that is the subject of a policy statement or other document approved by the Commissioner or his delegate. In general, briefs, actions on decision, and legal memoranda should refer to the "position" of the Office. In particular cases, the Office of Chief Counsel may have an established " position" on the law which is to be followed by all Associate Chief Counsel and Division Counsel offices, but it is not generally characterized as "policy." The Chief Counsel may, however, promulgate policies to be followed by the Office in handling matters within its jurisdiction, such as the litigation and settlement of cases.

The proper method for conveying the positions of the Office and the policies of the Service is through published guidance. In contrast, litigation should be used as an enforcement tool to advance and defend established positions, not as a vehicle for making policy. The importance of litigation to the administration of the tax law is not measured by the amount of taxes collected through litigation, but rather by its success in defending the Service’s position on the proper interpretation of the tax laws. The position taken in a case must be one that is reasonable based on the facts of the case and one which makes the maximum contribution to a sound tax system. Thus, it is the broad effect of the case which must govern our litigation attitude in specific cases. This litigation policy is applicable to all cases, including those we refer to the Department of Justice.

The position taken in any case must represent the official position of the Service, not just the position of a particular division or office. Attorneys as well as supervisors must always take cognizance of the fact that a position taken solely to win a case against one taxpayer may in the future be used by other taxpayers against the Service. These principles apply with equal force even when the sole or primary purpose of the argument is to improve the Government’s position in settlement negotiations. Thus, the development of the litigation position of the Office of Chief Counsel must take into consideration the broad effect of such position as it affects all taxpayers in the administration of the tax laws.

In applying the litigation policy of the Office, it may be necessary in particular cases to settle or concede an issue which ordinarily would be litigated. This type of situation usually arises in cases where, under the existing facts and circumstances, it would be unwise to use that case as a vehicle to establish the broad objectives of the Service. Also, where an appellate court has decided an issue in a case contrary to the Service position, it may be necessary to settle or concede the issue in cases appealable to that court until an appropriate case can be litigated in another circuit. These types of cases must be coordinated with the Associate Office or Offices responsible for interpretation of the section or sections at issue. The Associate Office should consider whether guidance is appropriate to help resolve the issue.

Consistent with Executive Order 12988 on Civil Justice Reform, it is the policy of the Office of Chief Counsel, unless there are compelling reasons otherwise, to settle or eliminate as many issues as is feasible or justifiable prior to submission of a case for decision by the court. Every effort should be made to settle the issue or issues on which there are no real basic differences between the parties.

Published guidance generally refers to that body of guidance that sets forth the definitive position of the Service, as approved by the Commissioner and the Department of the Treasury. Published guidance must be followed by all components of the Service and can be relied upon by taxpayers in litigation. For purposes of this section, published guidance includes treasury decisions, notices of proposed rulemaking, revenue rulings, revenue procedures, and Internal Revenue Bulletin notices and announcements.

The Associate Chief Counsel is responsible for the development and issuance of all published guidance. In the course of drafting published guidance, the Associate Chief Counsel is charged with building a consensus among all interested parties within the Department of the Treasury, including other offices within Counsel, the operating divisions and other components of the Service, and the Office of Tax Policy, and with elevating significant, unresolved issues to the appropriate official for determination. To the extent necessary, the Associate Chief Counsel is also responsible for coordinating with other Federal agencies, such as the Department of Justice.

The Division Counsel has two key roles to play in the development and issuance of published guidance.

Division Counsel has primary responsibility for the litigation of cases in the Tax Court and the referral of general litigation and refund cases to the Department of Justice. In this role, Division Counsel is responsible for development and execution of litigation strategy, including selection of cases to litigate, whether to try or settle particular cases, whether to agree to mediation/arbitration, whether to employ expert witnesses, etc.

In the course of litigation, Division Counsel must determine that the position to be advanced in Tax Court or other litigation accurately reflects the Service’s position on the law. To the extent that position is unclear, Division Counsel must coordinate with the appropriate Associate Chief Counsel. This coordination may be accomplished through informal or formal advice procedures, as appropriate for the issue or case.

In general, documents to be filed in Tax Court, as well as letters to the Department of Justice regarding the prosecution or defense of cases in the bankruptcy or district courts, will not be subject to pre-review by the Associate Chief Counsel. Mandatory pre-review of such documents will, however, be required where:

The Associate Offices, in conjunction with Division Counsel, will establish a list of issues in which pre-review will be required. This will ensure that uniform positions and procedures are adopted and that the published guidance being prepared by the Associate Office is informed by the practical information to be derived from this review. The Associate Chief Counsel and Division Counsel will consult regarding the prompt removal of any pre-review requirement once the Service’s position has become sufficiently established that pre-review is no longer necessary. For a list of issues for which pre-review is mandatory, see Exhibit 31.1.1–1 and Exhibit 35.11.1.1. Each office is, however, responsible for determining whether pre-review or coordination is warranted based on the standards articulated in paragraph (1), above, regardless of whether the case involves an issue specifically included on the established pre-review list. In addition certain Tax Court documents require review by the Associate Offices. See Exhibit 31.1.1–2

As provided in Executive Order 12988 on Civil Justice Reform, a motion for sanctions must be reviewed by the agency sanctions officer. This includes motions by the Government asking the court to sanction opposing parties, as well as motions by opposing parties seeking sanctions against counsel, the United States, the Service, or its employees. The Associate Chief Counsel (Procedure and Administration) is the designated sanctions officer for the Office of Chief Counsel.

Sanctions subject to review by the sanctions officer under the Executive Order include motions to sanction a taxpayer’s representative for violations of section 6673(a)(2), sanctions under the Tax Court Rules of Practice and Procedure, and sanctions based on the Tax Court’s inherent power to regulate conduct in cases that come before it, including any such sanctions imposed or sought to be imposed against Chief Counsel attorneys or Service employees.

In addition to the review required by the Executive Order, it is the policy of the Office that certain other matters involving sanctions will also be subject to pre-review by the Sanctions Officer. Those matters include letters advising opposing counsel of a potential conflict of interest or of a potential motion to disqualify based on a conflict, letters to the Department of Justice recommending that sanctions be sought against an opposing party, and any referral of a private practitioner to the IRS Office of Professional Responsibility. Requests for imposition of the section 6673(a)(1) penalty and motions for attorneys fees (unless involving alleged misconduct by counsel) are generally not subject to Sanctions Officer procedures. Procedures for obtaining the required review are found at CCDM 35.10.2.2.3.

Adverse decisions of the Tax Court, Federal District Courts, the Court of Federal Claims, and the Courts of Appeals will be reviewed by the appropriate Associate Office which will prepare a letter to the Department of Justice recommending for or against appeal. Procedures for preparing appeal recommendations can be found in CCDM Part 36.

Procedural issues relating to practice before the Tax Court cut across all divisions and offices. In order to maintain uniformity in this area, the Associate Chief Counsel (Procedure and Administration) acts as the Office’s liaison with the Tax Court and the Court of Federal Claims and is responsible for matters of Tax Court procedure.

Division Counsel offices are responsible for providing legal advice relating to case development to their respective clients. Such advice is not subject to pre-review by the Associate Chief Counsel except to the extent consultation is necessary to determine the position of the Service. For procedures regarding pre-review of legal advice, see Part 33.

Associate offices are responsible for providing legal advice to the Operating Divisions, other components of the Service, and Division Counsel regarding the technical position of the Service with respect to proper interpretation of the Code.

Occasionally, the field client will request case-specific advice directly from the Associate Chief Counsel, rather than going to local Division Counsel, or may turn to local Division Counsel for advice on matters of interpretation of the Code that may be of national application. In such cases, the receiving office should review the request and either forward the request to the appropriate office or coordinate the response as appropriate.