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The decision to appeal from an adverse decision will be made by the Chief Counsel. That decision will be based on the recommendation of the Associate Chief Counsel with responsibility over the technical issues presented in the case. The Associate Chief Counsel will have considered Division Counsel’s recommendation and will have reached a consensus with Division Counsel regarding appeal, or will present the opposing points of view to the Chief Counsel for resolution.
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Procedures for appellate cases are contained in CCDM Part 36. For a discussion of what constitutes an appellate case for purposes of these procedures, see CCDM 36.1.1.2.
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In General. Field Counsel must establish appropriate procedures to learn of the entry of each judgment or appealable order concerning any collection case at the earliest possible time. The Department of Justice (DJ) has instructed each U.S. Attorney to promptly furnish copies of all opinions, orders, and decisions directly to the appropriate Field Counsel office. With respect to adverse state court decisions, the U.S. Attorney will explicitly advise Field Counsel of the applicable state court appellate time limits within which the Government’s appeal processing is to be completed.
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Correspondence. Upon being informed of an adverse decision by the Tax Division or the U.S. Attorney, Field Counsel should immediately contact the Associate Chief Counsel office with jurisdiction over the case, by telephone or email, to advise the appropriate branch chief. As soon as the adverse decision is received, Field Counsel should fax a copy to the appropriate Associate office. All pertinent documents to the issues on appeal should be transmitted immediately to the appropriate branch without waiting for a request by DJ or the Associate office. The correspondence should not be directly sent to DJ or the U.S. Attorney. If time permits, the Associate office attorney may request additional documentation from Field Counsel.
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Time Limitations. Unless a specific deadline has been set or the circumstances of the case require a shorter period of time to act, within 30 days of the adverse decision, Field Counsel should contact the DJ attorney who tried the case and request the filing of a protective notice of appeal.
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From United States District Courts and Court of Federal Claims. In appeals to courts of appeals, including bankruptcy cases, the recommendation of Division Counsel, if any, should be received by the Associate office with jurisdiction over the case no less than 10 days after notification of the adverse decision.
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From Courts of Appeals. Recommendations by Division Counsel relative to certiorari should be received by the Associate office with jurisdiction over the case no later than 10 days from the date of the order.
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State Court. In state court proceedings where the time for appeal is 30 days or more, the recommendation of Division Counsel, if any, should be received by the Associate office with jurisdiction over the case no less than 10 days after entry of the adverse decision. If the period for appeal is less than 30 days, Field Counsel should advise the appropriate Associate office branch chief by telephone so that steps can be taken to protect the appeal period and ensure that a recommendation is made to the Department of Justice within sufficient time to allow DJ to take action before the expiration of the time for appeal.
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Effect of Extensions. In considering the time for referral of proposed appeal recommendations, Division Counsel should not rely upon or consider any extended time which may be secured by reason of the filing of a protective notice of appeal.
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Offers in Settlement. If the Tax Division forwards an offer in settlement in an appeal case, the matter, at a minimum, will be orally coordinated with Field Counsel. If time permits, the Department of Justice letter, together with enclosures and Field Counsel’s legal file, will be forwarded to Field Counsel for a recommendation. Field Counsel will return the legal file with the recommendation. The Department of Justice has agreed that when requesting Chief Counsel’s view, it will furnish all pertinent information, including its views on settlement.
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Recommendations. See CCDM Part 36 for procedures concerning appeal recommendations.
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Closing the Field Counsel Case. Field Counsel’s jacketed case should be closed and a copy of its closing memorandum placed in the legal file prior to transmittal of the file to the Associate office with jurisdiction over the case. If the case cannot be closed because other aspects of the case remain open at the trial level or due to other reasons, Field Counsel should either extract from the file all documents pertaining to the appeals aspect, or make legible copies of such documents for transmittal to the Associate office, with recommendation of Division Counsel concerning an adverse appeal, if appropriate.
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Appellate Briefs and Documents. If more than one copy of any appellate brief is received from the Tax Division, the Associate office will transmit a copy to Field Counsel. In addition, the Associate office will transmit to Field Counsel a copy of any important document or letter received from the Tax Division. Field Counsel is not required to furnish any comments on the brief, document, or letter unless requested to do so by the Associate office or it believes some comment is necessary.
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Return of the Area Counsel File. Normally the Field Counsel files are kept until the time for certiorari expires. However, if Field Counsel needs the files, a request for them should be made to the proper branch.
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After final disposition of the appellate aspects of a case, the Associate Chief Counsel project file is closed and Field Counsel’s legal file (if forwarded to the Associate office) will be returned for such further field action as may be required.
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Field Counsel should advise the Area Director’s office with respect to adjustment of accounts, refunds of monies, release of levies, and other actions.
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For procedures relating to appeals and the process for recommending for or against appeal, see CCDM 36.2.
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Field Counsel Closing. If a case is settled or tried and is not appealed, the Department of Justice will send a letter to Field Counsel stating that the case has been closed in the Tax Division. The letter will be sent after all action has been completed on the settlement or the appeal period has expired. Usually, the DJ closing letter on a case not appealed by the taxpayer is prepared 10 days after the expiration of the appeal period. On receipt of the closing letter, the Field Counsel attorney should close the case, even if the case is being kept open by DJ solely for collection purposes.
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Associate Chief Counsel Office Closing. If a case is appealed, but affirmed or decided such that no remand is necessary, an attorney from the appropriate Associate office should close the case when the DJ closing letter is received. Those attorneys are also responsible for closing any other refund cases initially assigned or transferred to the Associate office while still pending in district court or the Court of Federal Claims.
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In most instances, the Department of Justice will return the administrative files to Field Counsel with its closing letter. It may be necessary, however, to remind the DJ attorney to return the files. Upon receipt of the files, Field Counsel should prepare a closing memorandum, returning the administrative files to the Service Center or Area Director. A closing memorandum serves to process a refund suit for closing, tells the basis on which the case was closed, and disposes of the legal and administrative files.
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There are two types of closing memoranda: Form 3011-B, Transmittal Memorandum (100% Penalty Cases) is used only for trust fund recovery penalty cases, and Form 3011-A , Transmittal Memorandum is used for all other tax cases. The administrative files are returned to the Area Director only when a trust fund recovery penalty case is closed. If any returns were requested in a trust fund recovery penalty case from the Service Center, these files are returned to the Service Center. In cases under the jurisdiction of TEGE, the files are returned via memorandum to the TEGE group from which they were received. However, if any files were received from a TEGE Assistant Chief Counsel office, such files should be returned to that office.
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If a refund has been made, a copy of the recomputation used to determine the refundable amount and a copy of the Notice of Adjustment memorandum should be in the legal file.
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The office closing the case must determine whether the case is to be classified as significant pursuant to the criteria listed in this paragraph. The legal files in cases classified as significant are forwarded to the Office of the Associate Chief Counsel (P&A), for storage. These files are retained for thirty years by one of the federal record centers of the General Services Administration, and then destroyed. All other cases are retained for ten years. The classification must be made by a person who is, at a minimum, a GS/GM-15. If a case is classified as significant, the words, "Significant Case" are to be written or stamped on the outside of the legal file. The initials of the person classifying the case and the date should be placed close to the words, "Significant Case." The following is a guideline as to which cases should be considered significant:
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There has been a petition for certiorari filed by the Government or when the Government acquiesces in a petition for certiorari filed by a taxpayer or taxpayers.
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Important, novel, or controversial tax questions are involved.
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The Service prepared a formal Action on Decision.
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An issue is decided which might affect the particular taxpayer for an extended time period.
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In the discretion of the classifier, the file merits retention.
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Closed files should normally be retained in the closing office for one year prior to being forwarded to a federal records center for storage so that they may be easily retrievable if needed in related or similar cases. More rapid forwarding to a federal records center may be authorized by the Area Counsel.
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Upon forwarding to a Federal Records Center (FRC), the relevant FRC data (record group number, accession number, FRC box number, and FRC location number), should be recorded and retained to assist in the event retrieval from the federal records center is necessary.
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An important prerequisite to the closing of a refund case in which money is repaid by the Government is the preparation and transmittal to the Service Center of a payment memorandum known as a notice of adjustment. It is a document that instructs the Service Center or Area Director to refund or credit a certain amount of tax, plus applicable amounts of penalty, and assessed statutory interest. A notice of adjustment is only prepared when the Government has either partially or totally lost a case, and a final judgment in favor of the taxpayer has been entered, or a taxpayer’s offer to settle a case has been accepted and a refund or credit is warranted. Payment memoranda in trust fund recovery penalty cases may be sent to the Service Center or the Area Director. All other payment memoranda should be sent to the Service Center.
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How Prepared. Form 8690 or Form M-4456 is used for refunds pursuant to judgment. Form 8691 or Form M-4457 is used for refunds pursuant to settlement or administrative refund (Government concession). In trust fund recovery penalty cases, care should be taken to ensure that appropriate abatements are requested.
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By Whom Prepared. The Form 8691 or Form M-4457 is now prepared by the Department of Justice in settled cases, when feasible, and forwarded directly to the Service Center or Area Director. At the discretion of DJ, prepared forms may be sent to the Field Counsel or Associate Chief Counsel attorney for execution and forwarding to the Area Director or Service Center.
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If a recomputation is required, DJ may request the Counsel attorney to prepare and execute the memorandum upon receipt of the recomputation.
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In cases in which final judgments have been entered against the Government, the Field Counsel attorney will prepare the payment memoranda.
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The payment memorandum should request copies of both the statutory interest computation and the notice of adjustment. The purpose of these copies is to speed resolution of any dispute over the amounts refunded or credited. When the statutory interest computation is received, the Field Counsel attorney should review the computation. If any portion appears to be in error, the Counsel attorney should consult the DJ attorney about delaying delivery of the refund check until the statutory interest computation can be verified.
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As a consequence of the Equal Access to Justice Act (Pub. L. No. 96-481), effective October 1, 1981, the Tax Division employs different procedures for ending refund suits which are fully conceded by the Government. These procedures do not affect the processing of other refund cases.
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Section 204 of the Act amended 28 U.S.C. § 2412, to require, in appropriate circumstances, the award of attorneys’ fees and reimbursement of other related expenses to a prevailing party other than the Government. Although the Act does not define prevailing party, the legislative history states that a party may be deemed to be the prevailing party on the basis of a favorable settlement. See H.R. Rep. No. 96-1418, at 11 (1980).
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A stipulation for entry of judgment would leave open the question of a plaintiff’s entitlement to costs pursuant to 28 U.S.C. § 2412. The Government’s usual form of stipulation for dismissal states that each party is to bear its own costs. According to the Tax Division, plaintiffs used to readily agree to bear their own costs. Now, some counsel in full concession cases have been refusing to sign stipulations of dismissal, insisting instead on the entry of judgment, with costs. The Tax Division believes that only attorneys familiar with the Act will insist on the entry of judgment in full concession cases to preclude erosion of the right to attorneys’ fees and other litigation expenses. The Tax Division wants the procedures for terminating all full concession cases to be uniform so that all attorneys and pro se taxpayers will have equal opportunities to assert their rights to attorneys’ fees and other expenses. The concession by judgment procedure will, incidentally, expedite the commencement of the 30-day limitation period provided by the statute (28 U.S.C. § 2412(d)(1)(B)) for submitting a claim for fees and expenses. A stipulation for entry of judgment may be filed upon receipt from taxpayer’s counsel, but the Government must await receipt of the refund check before filing a stipulation of dismissal.
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Under the concession by judgment procedure, Form M-4457 will still be used. Although most of the printed language of Form M-4457 remains unchanged, the description of the basis for the refund (or credit) should read, "Government concession" rather than, "administrative settlement" and should omit the dismissal with prejudice language.
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For judgment stipulations in full concession refund cases, see Exhibits 35.11.1-32 and 35.11.1-33.
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For cases commenced after February 28, 1983, the provisions of section 7430 will govern the award of reasonable litigation and administrative costs rather than the Equal Access to Justice Act. The procedures and considerations outlined above apply equally to these cases with the exception that for judgment stipulations in full concession cases commenced after February 28, 1983.
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In general, all jacketed collection cases (Associate office and field) will be closed as soon as the work required of the field office or the Associate office is completed.
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Cases in litigation should be kept open until notified by the Department of Justice or United States Attorney that the litigation has been completed, the matter will not be pursued further, or their case has been closed. In situations in which Field Counsel, on the basis of facts known to the office, is of the opinion the proceeding can be considered closed, Field Counsel may write to DJ and advise them that the Chief Counsel’s file is being closed.
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When there is an adverse order entered (excluding bankruptcy appeals to the district court), the case should be closed in the Field Counsel office and the file transmitted to the Associate Chief Counsel with jurisdiction over the case, together with any proposed appeal letter or recommendation of the Field Counsel.
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Bankruptcy Code Proceeding. The general rule set forth in (1), above, is equally applicable to all Bankruptcy Code proceedings. However, if in the discretion of the supervisor, it is determined that no additional work will be necessary, the case can be closed upon the completion of the required work. If it becomes necessary to reopen the case under the same chapter, the reopening will be counted as a new receipt for statistical case load purposes. The reopened case will not be included as a receipt for staffing model purposes.
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Whenever a case is closed, the office or officials who originated the case should be advised by letter or memorandum of such closing, the reason for the closing, and any action which should be taken. The following procedures are suggested.
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Field Counsel should coordinate with Area Director offices to ascertain what information is feasible and necessary to forward and to what extent copies of documents need to be added to the Area Directors’ files.
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The Area Director’s office should receive a copy of any judgments.
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Field Counsel must make certain that the Area Director office is informed as to the final disposition of a court case and, when necessary, furnished with copies of trial or appellate court orders and opinions.
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When a memorandum or letter is inappropriate or not available, a memorandum should be prepared for the file to advise any subsequent reader of the reason for closing the file.
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Use of a Closing Stamp. The Area Counsel may find it feasible to use a process similar to the one described below which is in use in Associate offices.
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A separate memorandum need not be prepared to close a jacketed Associate Chief Counsel file. The advisory opinion memorandum, letter, or memorandum advising the originating office of the case disposition or that files are being returned, or other document explaining that the matter has been finalized, serves to show the case can be closed.
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When closed, all Associate office legal files will be stamped on the face of the jacket with the closing stamp and with the date and initials of the supervisor (or branch chief secretary, when so authorized), approving the closing. The closing stamp-mark must be initialed to show that the closing is approved.
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After the branch records are marked CLOSED, the legal file is sent to the docket room; the file is then retained in the docket room or sent to closed files.
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Closing Field Counsel Files. The Field Counsel files will be considered closed upon completion or review of the material submitted by the Area Director office. They will be retained in the docket room for one year after the last piece of correspondence has been received, and then they will be destroyed.
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Significant Associate Office Cases. Due to space and budgeting limitations, the retention period for closed Associate office files by the Federal Records Center is now 10 years after closing. However, pursuant to Records Control Schedule 106, if a file is designated as significant, it will be retained for 25 years prior to destruction. The designation as significant must be:
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Made by a GS/GM-15 at closing
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Clearly designated as significant in red ink on the case jacket
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Initialed
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Dated
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Entered as a field in GLTRACK
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Definition of Significant. A significant case is one that contains materials of an important precedential nature in which the legal issues are likely to arise again and are novel or controversial. The designation should not be made routinely. It should only apply to those cases which clearly merit an extended retention period of 25 years. The determination is to be done on a case by case basis and is a judgment to be made by the supervisor/manager.
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Penalty Refund Cases Under Sections 6682, 6694, and 6702. In any case in which a taxpayer has filed an action for a refund of the penalty imposed under sections 6682, 6694, or 6702, and Field Counsel has been advised that the court has made a final determination as to the taxpayer’s liability for the penalty, the Service Center will be notified as to the final outcome of the litigation so that steps can be taken to either collect or abate the penalty.
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Field Counsel should periodically check the status of these cases with the Department of Justice to ascertain whether a decision has been rendered and the appeal period has run so that the appropriate action can be taken.
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Form 3011-A, Transmittal Memorandum (which is presently being used by Assistant Chief Counsel (APJP) to close refund cases), should be used to notify the Service Center of the outcome of these types of collection litigation refund cases. Modifications should be made to the form where appropriate. An original and two copies of Form 3011-A should be transmitted.
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Field Counsel should ascertain the appropriate office and STOP number in the Service Center to which the Transmittal Memorandum should be directed.
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Along with the administrative file, relevant tax returns, and Certificate of Assessments and Payments, the Form 3011-A should advise the Service Center that the balance of the penalty should be collected (or the penalty abated).
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Appeal Cases. Associate Chief Counsel office appeal cases will be closed when the Department of Justice advises that no appeal or petition for certiorari will be filed or the time for filing a petition or appeal from a final order has expired.
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In General. Before closing appeal cases, copies of all correspondence, and briefs sent or filed at the appellate level should be inserted in the Associate office appeal file. Briefs should be attached to a cardboard back, two-hole punched and inserted in the appeal file.
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Appeal cases should be closed promptly after the necessary action is completed on the case. Adverse appeal cases in which the Associate office has recommended no appeal should be closed after receipt of a letter from the Tax Division stating that the Solicitor General has determined an appeal will not be prosecuted. Where there has been a favorable decision, an appeal file may be closed after the appeal period has expired. The belief that an appeal has not been taken should be verified with the Tax Division.
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Field Counsel Notification. The Field Counsel file forwarded to the Associate office should be returned by a transmittal Form M-2039. The subject block should always include the taxpayer’s name and the Field Counsel file reference. The block returning the Field Counsel’s legal file jacket should be checked, as well as the block stating the Associate office file is closed.
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Tax Division Correspondence. In adverse cases, either a copy of the Tax Division’s letter should be inserted in the Field Counsel file or the last box should be checked and a notation inserted such as, " A copy of a letter dated September 9, 1996, advising that the Solicitor General determined an appeal would not be prosecuted." If the Field Counsel’s file was not forwarded to the Associate office, a transmittal Form M-2039 should be prepared forwarding a copy of the Tax Division letter if the decision was adverse. Tax Division’s recommendation or the recommendation of the attorneys in the Solicitor General’s office should be placed in the Associate office file and not in the Field Counsel file.
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Exempt organization declaratory judgment cases under section 7428 in the United States District Court for the District of Columbia or the Court of Federal Claims are closed in a similar manner as income tax cases using Form 3011-A. However, the administrative files are returned by separate memorandum to the exempt organizations function which issued the final adverse determination.