AccessibilitySkip to Top NavigationSkip to Main ContentHome  |  Contact IRS  |  About IRS  |  Site Map  |  Español  |  Help  

Part 35. Tax Court Litigation

Chapter 11. Litigation Exhibits

Section 1. Litigation Exhibits (Cont. 2)

35.11.1  Litigation Exhibits (Cont. 2)

Exhibit 35.11.1-106  (08-11-2004)
U.S. Tax Court Standing Pretrial Order

This image is too large to be displayed in the current screen. Please click the link to view the image.
This image is too large to be displayed in the current screen. Please click the link to view the image.
This image is too large to be displayed in the current screen. Please click the link to view the image.

Exhibit 35.11.1-107  (08-11-2004)
Pretrial Memorandum

This image is too large to be displayed in the current screen. Please click the link to view the image.
This image is too large to be displayed in the current screen. Please click the link to view the image.

Exhibit 35.11.1-108  (08-11-2004)
Letter Enclosing Settlement Documents

[Name and address of petitioner(s)]
    In re: [Name] v. Commissioner
Docket No. [docket no.]
Dear Mr./Mrs./Ms. [name]:
  In order to finalize our settlement, we must file with the Tax Court a decision document that shows the amount of tax and additions to tax/penalties that you owe based on that settlement.
  Enclosed are the following documents:

  1. A decision document (original and two copies) that shows the amount that you owe;

  2. A Statement of Account that shows the calculation of the amount owed and all the payments and other credits that are reflected on the records of the Internal Revenue Service for the tax year(s) at issue in your case;

  3. A calculation of the estimated interest that you owe based on your settlement if you pay the entire amount of tax [additions to tax/penalties] and interest by [date]; and

  4. Publication 594, which explains the collection process.

  Please carefully review the Statement of Account, the interest computations and the decision document to make sure that you agree with them. It is important that they be correct because the United States Tax Court will usually not change its decision, even if there is a mistake, unless the Court is notified of the mistake within 30 days after the decision is accepted by the Court. If you believe that there are mistakes in our calculations of the amount you owe or in the decision, please telephone me as soon as possible.
  If you agree with the calculations and the decision document, please sign the original and one copy of the decision document and return them to this office for filing with the Tax Court. The remaining copy as well as the Statement of Account and the calculation of interest are for your records. [Please note that because the title of the Tax Court case is under both of your names, both of you must sign the decision.] [The United States Tax Court has ordered the parties to file the decision by [date decision due with Court], so you should return the decision to us before that date so that we can file it with the court on time.]
  Once the decision document is filed and entered by the Tax Court, the Internal Revenue Service will send you a bill for the amount you owe. [Because a joint return was filed, both spouses are jointly and severally liable for the tax, any additions to tax and penalties and the interest.] In case you want to pay the tax, [additions to tax/penalties] and interest before you receive the bill, you may do so. As previously noted, the interest calculations are estimates and only apply until [dates noted above]. A final computation will be made at the Service Center. The interest you owe will increase if full payment is not made by those dates. Also, interest will continue to run on the unpaid portions if you pay less than the total amount due.
  If you decide to immediately pay some or all of the amount you owe, please mail a check to the [name and address of local Service Center]. The check should be made payable to the United States Treasury. In order to process the check and apply the payments appropriately, please include all of the following information with your check:

  1. Your name(s) and address(es).

  2. Your Social Security number(s).

  3. The tax year(s) for which you are paying.

  4. The type of tax due (for example, income tax, estate tax, excise tax).

  5. The total amount of your payment. If you owe tax for more than one year, the Internal Revenue Service will also need to know how much you are paying for each year. You should also state how much of each year’s payment you are paying towards tax, [how much for the additions to tax,] and how much you are paying towards interest.

  6. A copy of the decision document which you have signed.

  Please be advised that you should not consider any agreement to settle this case final and binding until we have executed the decision documents and mailed them to the Tax Court for filing. If you have any questions about this matter, please let me know.
       
      Very truly yours,
       
      [Attorney’s name]
Tax Court Bar #

Exhibit 35.11.1-109  (08-11-2004)
Letter to Tax Court Judge Reporting Status of Settled Cases

[Letterhead]
[Date]
The Honorable [Name]
Judge, United States Tax Court
400 Second Street, N.W.
Washington, DC 20217
  Re: [Name] v. Commissioner, Docket No. [docket no.]
Dear Judge [Name]:
  This refers to the trial calendar in [city and state] on [date] at which you presided. At that trial calendar, this case was reported settled but the parties were unable to file settlement documents while the Court was in session.
  The purpose of this letter is to advise that, as of this date, the parties to this case have been unable to submit settlement documents, the reason for the delay, and the estimated date when the settlement documents will be filed with the Court. [Examples are listed below.]
  [Example 1] A recomputation is expected to be completed within two weeks. Decision documents will be forwarded shortly thereafter. It is expected that the signed decision documents will be forwarded to the Court within four weeks of this date.
  [Example 2] Petitioners state that they have signed the decision documents and mailed them to us. We expect to forward them to the Court within ten days.
  [Example 3] Complications have arisen in the recomputations. The petitioner and respondent are hopeful that stipulated decision documents will be filed within 30 days.
  [Example 4] Stipulated decision documents signed by the petitioners have been received. They will be forwarded to the Court within 24 hours.
  Very truly yours,
   
  [Attorney]
cc: [petitioner or petitioner’s counsel]
bcc: [Area Counsel] 		 

Exhibit 35.11.1-110  (08-11-2004)
Cases Involving a Complete Settlement or Concession Requiring a Report to the Joint Committee

This exhibit illustrates cases involving a complete settlement or concession, as distinguished from a partial settlement or concession, in which a report to the Joint Committee is required covering all the years shown before any settlement document is filed with the court.

Settlement of docketed years involving a tentative allowance of a refund or credit under I.R.C. § 6411 not previously reported to the Joint Committee and deficiencies resulting from the settlement:

Taxable
Year		 Kind of
Tax		 Previous
Allowance,
Sec, 6411 		Deficiency Net Overpayment
for Year
[year] Income $ 1,800,000 $ 100,000 $ 1,700,000
  Interest assessed and paid 1,860,000 100,000 1,760,000
[year] Income 450,000 120,000 330,000
[year] Income -0- 80,000 (80,000)
         
Aggregate net overpayment for report to Joint Committee $ 2,070,000
         
Settlement of docketed years not involving a tentative allowance:
Taxable Year Kind of Tax Overpayment Deficiency for Year Net Overpayment
[year] Income $ 400,000   $ 400,000
[year] Income 100,000 100,000 (100,000)
[year] Income 1,800,000   1,800,000
[year] Income   40,000 (40,000)
Aggregate net overpayment for all years for report to Joint Committee: $ 2,060,000

Exhibit 35.11.1-111  (08-11-2004)
Cases Involving a Complete Settlement Note Requiring Review by the Joint Committee

This exhibit illustrates cases involving a complete settlement, as distinguished from a partial settlement or concession, in which review by the Joint Committee is not required because the aggregate net overpayment for all years is less than the jurisdictional amount.

  1. Settlement of docketed years involving a tentative allowance of a refund or credit under I.R.C. § 6411 not previously reported to the Joint Committee and deficiencies resulting from the settlement:

    Taxable
    Year    		 Kind of Previous Allowance ,
    Tax    		 Sec. 6411 Deficiency Net Overpayment
    for Year
    [year] Income $ 900,000 $ 300, 000 $ 600,000
    [year] Income 1,500,000 250,000 1,250,000
    [year] Income 200,000 -0- 200,000
    [year] Income 100,000 170,000 (70,000)
    Aggregate net overpayment for all years $ 1,980,000

  2. Settlement of docketed years not involving a tentative allowance:

    Taxable
    Year    		 Kind of
    Tax    		 Overpayment Deficiency Net Overpayment
    for Year
    [year] Income $ 1,200,000*    
      Fraud Penalty Assessed and Paid 140,000*    
      Interest Assessed and Paid 20,000*    
      Delinquency Penalty   $ 150,000  
      Negligence Penalty   30,000  
    Total   $ 1,360,000 $ 180,000  
            $ 1,180,000
    [year] Income   $ 160,000  
      Fraud Penalty   30,000  
    Total     $ 190,000  
            (190,000)
    Aggregate net overpayment for all years $ 990,000
    *Paid after issuance of statutory notice  

Exhibit 35.11.1-112  (08-11-2004)
Method of Computing the Aggregate Minimum Net Overpayment

  1. Report to Joint Committee required:

    Taxable
    Year    		 Kind of
    Tax    		 Overpayment
    Attributable to
    Issues Settled
    or Conceded    		 Maximum Deficiency
    Which Remaining
    Issues Could
    Produce    		 Minimum Net
    Overpayment
    for Year
    [year] Income $ 2,140,000 $ 40,000 $ 2,100,000
    [year] Income 160,000 20,000 140,000
    Aggregate minimum net overpayment for report to Joint Committee $ 2,240,000

  2. Report to Joint Committee not required:

    Taxable
    Year    		 Kind of
    Tax    		 Overpayment
    Attributable to
    Issues Settled
    or Conceded    		 Maximum Deficiency
    Which Remaining
    Issues Could
    Produce    		 Minimum Net
    Overpayment
    for Year
    [year] Income $ 400,000 $ 280,000 $ 120,000
    [year] Income 1,020,000 160,000 860,000
    Aggregate minimum net overpayment $ 980,000

  3. Report to Joint Committee required because the tentative allowances not previously been reported to the Joint Committee will cause an aggregate net overpayment in excess of the jurisdictional amount even if all issues in the Tax Court case are disposed of by trial or settlement favorable to the respondent:

    Taxable
    Year    		 Kind of
    Tax    		 Previous
    Allowance,
    or Conceded    		 Maximum
    Potential
    Deficiency in
    Controversy     		Minimum Overpayment
    (Maximum Deficiency)
    for Year
    [year] Income $ 2,200,000 $ 100,000 $ 2,100,000
    [year] Income   80,000 (80,000)
    Aggregate net overpayment for report to the Joint Committee $ 2,020,000

Exhibit 35.11.1-113  (08-11-2004)
Joint Committee Report

  [initials]
[name and telephone number]
The Chairperson
Joint Committee on Taxation
Attn: Senior Refund Counsel
Room 3565
Internal Revenue Building
1111 Constitution Avenue, N.W.
Washington D.C. 20224 		 

Dear Chairperson:

  As required by section 6405 of the Internal Revenue Code, the following refunds or credits of income tax owing to [case name] of [city, state] in Docket No. [docket number] are reported before entry of stipulation:

Taxable
Year		 Type of
Tax		 Section 6405(a)
Refund
[year] Income $ 1,900,000
[year] Income 1,300,000
    $ 3,200,000

  Counsel’s proposed settlement of an issue relating to [description of issue] will cause a net aggregate overpayment in excess of the jurisdiction amount. The principal cause of the overpayments in [year] and [year 2] was [brief description of cause]. The years [years] are before the Tax Court. With respect to [year], there is a deficiency of $ [amount] and a section 6405(b) credit in the amount of $ [amount 2], for a net deficiency of $ [deficiency amount]. Accordingly, the section 6405(a) refund for purposes of the computation to determine if the threshold for Joint Committee jurisdiction is met is $ [amount]. Counsel’s proposed disposition is more fully explained in the attached Counsel Settlement Memorandum.

  The taxable income and tax liability reported on the returns and the taxable income as finally determined are as follows:

Year Taxable
Income (Loss)		 Tax
Liability		 Finally Determined Taxable
Income (Loss) Prior
To Allowance of NOLD
[year] $ 65,000,000 $ 31,000,000 $ 60,000,000
[year]* (3,000,000) -0- (2,500,000)

*Consolidated return.

Net operating loss deduction allowed:

Year Amount Carryback From
[year] $ 1,200,000 [year]

Taxpayer History

  The taxpayer was incorporated in [state] on [date], for [original business]. It has since expanded to [current business]. The taxpayer’s stock is publicly owned and listed on the New York Stock Exchange. The taxpayer has a subsidiary but did not file consolidated returns for [years].

  The [year] return is a consolidated return and $ [amount] of the finally determined consolidated loss of $ [amount] is attributable to the taxpayer. The principal causes for the [year] loss were [description of causes].

  The overpayments for [years] were caused by [describe cause of overpayments].

Prior Examination and Appeals History

  The revenue agent made numerous adjustments for the years [years]. Most of these adjustments have been agreed to by the taxpayer at the examination level. However, no agreement was reached as to the issues concerning [description of issues]. Subsequently, a 30-day letter was issued by the Examination Division and the taxpayer filed a protest with respect to the two unagreed issues. The Revenue Agent’s Report, which sets forth both the agreed and unagreed adjustments for the years [years], was issued on [date].

  The case was sent to the [city] Appeals office for consideration. As part of the appeals process, the issue concerning [describe] was resolved. However, no agreement was reached as to the issue concerning [describe]. Action by Appeals is more fully explained in the attached Appeals Transmittal Memorandum and Supporting Statement dated [date].

  The overassessments are approved.

  Very truly yours,
   
  Area Counsel

Attachments:
  Appeals Transmittal Memorandum and Supporting Statement
  Appeals Audit Statement
  Counsel Settlement Memorandum

Note: The name, symbols, and telephone number of the attorney preparing the report should be indicated. While the report is addressed to the Chairman, Joint Committee on Taxation, the envelope should be addressed to Senior Refund Counsel, Room 3565, Internal Revenue Service, 1111 Constitution Avenue, N .W.,Washington, DC 20224.

Exhibit 35.11.1-114  (08-11-2004)
Letter to the Joint Committee

U.S. DEPARTMENT OF JUSTICE
TAX DIVISION
[identifying initials]
[identifying case designation]
      [date]
The Honorable Chairperson
Joint Committee on Taxation
Room 1015
Longworth House Office Bldg.
Washington, D.C. 20515
  Re: [case name]
Civil Action No. [docket number]
Dear Ms. Chairperson:
  In accordance with the provisions of section 6405 of the Internal Revenue Code and the letter dated [date], from [name of Chief Counsel], Chief Counsel, Internal Revenue Service, there is transmitted herewith a copy of our letter of this date to Chief Counsel, Internal Revenue Service, and a copy of a Memorandum dated [date], in support of the proposed settlement, under the authority vested in the Attorney General under I.R.C. § 7122 and Executive Order 6166, in full settlement of all issues involved in the case of [case name], now pending in the United States District Court for the [district], Civil Action No. [docket number]. The proposed settlement would result in the refund of approximately $ [amount] in tax plus assessed interest paid, and statutory interest, for the years [years].
  The period of 30 days during which the overassessment will be withheld from final settlement expires on [date].
      Very truly yours,
      [NAME]
Assistant Attorney General
Tax Division
      By:
      __________
      [NAME]
Chief, Office of Review
Enclosures:    
  1 cc letter to Chief Counsel
1 cc Supporting Memorandum dated [date]

Exhibit 35.11.1-115  (08-11-2004)
Joint Motion for Voluntary Binding Arbitration

This image is too large to be displayed in the current screen. Please click the link to view the image.

Exhibit 35.11.1-116  (08-11-2004)
Joint Motion for Stipulation to be Bound by Findings of Arbitrator

This image is too large to be displayed in the current screen. Please click the link to view the image.
This image is too large to be displayed in the current screen. Please click the link to view the image.
This image is too large to be displayed in the current screen. Please click the link to view the image.
This image is too large to be displayed in the current screen. Please click the link to view the image.
This image is too large to be displayed in the current screen. Please click the link to view the image.

Exhibit 35.11.1-117  (08-11-2004)
Joint Motion to Continue for Settlement Purposes

This image is too large to be displayed in the current screen. Please click the link to view the image.

Exhibit 35.11.1-118  (08-11-2004)
Model Agreement to Mediate

1. The Mediation Process. This mediation is intended to help [name of taxpayer] and the Internal Revenue Service (the PARTIES) reach their own negotiated settlement of the issues to be mediated. See (2) below for the participants in the mediation process. To accomplish this goal, the mediator will act as a facilitator, assist in defining the issues and promote settlement negotiations between the PARTIES. The mediator will inform and discuss with the PARTIES the rules and procedures pertaining to the mediation process. The mediator will not have settlement authority and will not render a decision regarding any issue in dispute. The PARTIES WILL CONTINUE TO HAVE SETTLEMENT AUTHORITY FOR ALL ISSUES CONSIDERED UNDER THE MEDIATION PROCESS.

2. Nature of Process, Withdrawal. The mediation process is optional. The participants in the mediation session from [name of taxpayer], will be [name], [title]; and from the Office of Chief Counsel, will be [name and title]. The PARTIES must have participants attending the mediation session with decisionmaking authority, or such persons should be available by telephone. Either party may withdraw from the mediation process at any time prior to reaching a settlement of the issues to be mediated by notifying the other party and the mediator in writing.

Each PARTY:

  1. may involve other appropriate persons in the mediation;

  2. must notify the mediator and the other PARTY two weeks before the mediation session regarding participants on their mediation team; and

  3. may withdraw from the process at any time prior to reaching a settlement of the issues to be mediated by notifying the other PARTY and the mediator in writing.

3. Selection of Mediator, Costs. The PARTIES, by mutual agreement, will select a mediator. The mediator may be a non-IRS individual or an Appeals representative, with previous mediation training or experience. Co-mediators can also be selected. A mediator shall have no official, financial, or personal conflict of interest with respect to the PARTIES, unless such interest is fully disclosed in writing to the parties, and they agree that the mediator may serve. The costs of a non-IRS mediator or co-mediator will be shared equally by the PARTIES, subject to applicable rules and regulations for Government procurement. If an Appeals mediator or co-mediator is selected, the IRS will pay the expenses associated with the mediator (or co-mediator). Due to the inherent conflict that results because the Appeals mediator is an employee of the IRS, Appeals will provide to the taxpayer a statement confirming the employee’s proposed service as a mediator, that the person is a current employee of the IRS and that a conflict results from that mediator’s continued status as an IRS employee.

4. Issues to be Mediated. The mediation session will encompass the following items at issue in the Tax Court petition filed in [Name of petitioner] v. Commissioner, Docket No. [docket no.].

  1. [issue #1]

  2. [issue #2]

5. Submission of Materials. Each PARTY will present to the mediator a separate written summation not to exceed 20 pages (exclusive of exhibits consisting of pre-existing documents and reports) regarding the items in issue. The mediator will have the right to ask either PARTY for additional information before the mediation session if deemed necessary for a full understanding of the issues to be mediated. A copy of the information a PARTY gives to the mediator will be provided simultaneously to the other PARTY.

6. Proposed Schedule. Below is a schedule which will be followed by the PARTIES in preparation for the mediation process:

Date for selection of mediator: By month, day, year
Date for submission of materials to mediator and other party: A date which is two weeks before the date of the mediation session
Date for submission of participant’s list to mediator and other party: A date which is two weeks before the date of the mediation session
Mediation session: By month, day, year

7. Place of Mediation: The PARTIES should attempt to select a site near [name of taxpayer]’s office or an Internal Revenue Service Counsel office.

8. Confidentiality: The mediation process will be confidential. [name of taxpayer] acknowledges that the Mediator and the other persons invited by the PARTIES to participate in the mediation, will have access to all of [name of taxpayer]’s return or return information pertaining to the issues being mediated pursuant to I.R.C.§§ 6103(b), 6103(c) and 6103(n) and the regulations thereunder. (See attached Consent to and Acknowledgment of Disclosure of Return and Return Information.) Service employees involved in any way in the mediation process, and any person under contract to the Service that the Service invites to participate, will be subject to the confidentiality and disclosure provisions of the Internal Revenue Code, including I.R.C.§§ 6103, 7213 and 7431. IRS employees, [name of taxpayer], the outside mediator, and persons invited to participate by the PARTIES in the mediation shall not voluntarily, or through discovery or compulsory process, disclose any information regarding the mediation process or any communication made during the mediation process, including the settlement terms.

9. I.R.C. § 7214(a)(8) Disclosure: The PARTIES to this agreement acknowledge that Service employees involved in this mediation are bound by the I.R.C. § 7214(a)(8) disclosure requirements concerning violations of any revenue law.

10. No Record. There will be no stenographic record or tape recording of the mediation process.

11. Ex Parte Contacts Prohibited. There will be no ex-parte contacts with the mediator outside the mediation session.

12. Stipulation of Settled Issues or Decision Document . If the mediation process enables the PARTIES to reach an agreement on the issues, Counsel will draft a stipulation of settled issues or a decision document for the PARTIES’ signature and submission to the Tax Court. If the PARTIES cannot reach agreement on the issues being mediated, the PARTIES will prepare for trial as normal.

13. Precedential Use: A settlement reached by the PARTIES through mediation shall not serve as an estoppel in any other proceeding. Such settlement may not be considered in any factually unrelated proceeding and may not be used as precedent.

NAME OF TAXPAYER INTERNAL REVENUE SERVICE
By:________ By: ________
  [Title]
Date:________ Date:________

Exhibit 35.11.1-119  (08-11-2004)
Model Mediation Participants List

Case Name:________

Submitted by:________

Date:________

All participants who will attend the mediation on behalf of [name of party], including witnesses, consultants, and attorneys, are listed below. This form must be sent to the other PARTY and to the mediator two weeks before the mediation session.

     
NAME AFFILIATION ADDRESS

Exhibit 35.11.1-120  (08-11-2004)
Motion for Substitution of Exhibits

This image is too large to be displayed in the current screen. Please click the link to view the image.
This image is too large to be displayed in the current screen. Please click the link to view the image.

Exhibit 35.11.1-121  (08-11-2004)
Motion to Withdraw Exhibit for Purposes of Copying

This image is too large to be displayed in the current screen. Please click the link to view the image.

Exhibit 35.11.1-122  (08-11-2004)
Notice of Intent Not to File Reply Brief

NOTICE OF INTENT NOT TO FILE REPLY BRIEF
  RESPONDENT HEREBY NOTIFIES the Court of his intention not to file a reply brief in the above-captioned case, for the reason that respondent’s opening brief adequately addresses the relevant factual and legal aspects of this case.

Exhibit 35.11.1-123  (08-11-2004)
Example of Brief Cover Sheet

This image is too large to be displayed in the current screen. Please click the link to view the image.

Exhibit 35.11.1-124  (08-11-2004)
Joint Motion to Correct Record on Appeal

This image is too large to be displayed in the current screen. Please click the link to view the image.
This image is too large to be displayed in the current screen. Please click the link to view the image.
This image is too large to be displayed in the current screen. Please click the link to view the image.

Exhibit 35.11.1-125  (08-11-2004)
Tabular Form of Decision: Several Years