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Part 36. Appellate Litigation and Actions on Decision

Chapter 2. Appeal/Certiorari Recommendations

Section 6. Area Counsel and Associate Chief Counsel Responsibilities in Tax Court Cases on Appeal (Cont. 1)

36.2.6  Area Counsel and Associate Chief Counsel Responsibilities in Tax Court Cases on Appeal (Cont. 1)

36.2.6.2 
Associate Chief Counsel Responsibilities

36.2.6.2.3 
Protective Appeals and Cross-Appeals in Tax Court Cases

36.2.6.2.3.4  (08-11-2004)
Associate Chief Counsel Attorney Assignment - Protective Appeals and Cross-Appeals in Tax Court Cases

  1. While completing a favorable or adverse opinion review, or upon assignment of a taxpayer appeal, be alert to any circumstances that would indicate that the Commissioner should file a protective or cross-appeal. Consider any recommendation by Area Counsel for protective action.

  2. If Area Counsel has not made a recommendation, and protective action might be necessary, contact the Area Counsel attorney who handled the case in the Tax Court and discuss the need to have the favorable decision and the adverse decision entered by the court at or very near the same time. Most appeals courts require the Government to actively prosecute a protective appeal, even where the taxpayer has not yet appealed. Simultaneous entry of decision prevents the premature prosecution of these appeals.

  3. Once the decision to file a protective appeal or cross–appeal has been approved by the reviewer, prepare an appeal letter (see paragraph (6), below) and the notice of appeal for filing with the Tax Court. See CCDM 36.2.5.6 and CCDM 36.2.6.2.2. Except to the extent set forth below, the procedures for filing protective notices of appeal and cross–appeals are governed by those sections. Sample notices of appeal are reproduced at Exhibit 36.4.1–5. As a protective appeal generally involves multiple docket numbers, the attorney should pay particular attention to CCDM 36.2.5.6.1.

  4. Filing the notice of appeal in a protective appeal.

    1. A protective notice of appeal must be filed within the 90-day period following the entry of the Tax Court's decision. See CCDM 36.2.5.6.4.

    2. The notice of appeal must be hand-carried by the attorney to the Technical Services Support Branch in the Office of the Associate Chief Counsel (P&A) for filing with the Tax Court promptly after the decision to file a protective notice of appeal has been made.

    3. The Technical Services Support Branch should receive the notice of appeal at least five days before the expiration of the 90-day appeal period, since the notice should be filed on the 85th day after entry of the Tax Court decision.

      Caution:

      At least two circuits have, in the protective appeal situation, permitted the adverse party the benefit of the 120-day cross-appeal period. Estate of Lang v. Commissioner, 613 F.2d 770, 771 n.1 (9th Cir. 1980); Estate of Lidbury v. Commissioner , 800 F.2d 649 (7th Cir. 1986); but see Davies v. Commissioner , 715 F.2d 435 (9th Cir. 1983) (taxpayer could not use 120-day period since not party to the same decision). Despite these cases, it is office policy to file all protective appeals within the 90-day period.

  5. Filing the notice of appeal in a cross-appeal.

    1. The notice of appeal for a cross-appeal must be filed within 120 days following the entry of the Tax Court's decision. See CCDM 36.2.5.6.4.

    2. The notice of appeal must be hand-carried by the attorney to the Technical Services Support Branch for filing with the Tax Court promptly after the decision to file a cross-appeal has been made.

    3. Ideally, the notice of appeal should be delivered to the Technical Services Support Branch at the same time the letter in the taxpayer's appeal is sent to the Department of Justice. See CCDM 36.2.1. In any event, the Technical Services Support Branch should receive the notice of appeal at least five days before the expiration of the 120-day cross-appeal period.

  6. Letter to Department of Justice regarding protective appeals in whipsaw situation. Prepare a letter to the Assistant Attorney General, Tax Division, Department of Justice, requesting authorization to file and prosecute an appeal for protective purposes only, and stating that the appeal should be dismissed if the taxpayer does not file an appeal in the related case. A sample letter is reproduced at Exhibit 36.4.1–22, Protective Appeal Letter. Review and approval of a protective appeal letter is the same as a regular Commissioner appeal letter. See CCDM 36.2.1.1 and CCDM 36.2.6.2.2 .

  7. If the taxpayer does not file an appeal in the related case, the attorney should contact the Department of Justice to determine whether any further action is required to effect the dismissal of the appeal.

  8. If the taxpayer files a notice of appeal in the related case, prepare the appeal letter to the Department of Justice. In the appeal letter, the protective appeal should be noted and, if necessary, more detail of the office's position should be provided.

  9. Communication with the Department of Justice regarding cross-appeals.

    1. If a cross-appeal is recommended, generally there will be no communication with the Department of Justice unless the taxpayer files a notice of appeal. The letter to the Department of Justice in a taxpayer appeal is to be sent to the department within five days of the taxpayer's notice of appeal.

    2. If, however, the taxpayer files a notice of appeal on the 90th day and a cross-appeal is recommended, the letter should be sent to the Department of Justice within two working days after the service of the notice of the taxpayer's appeal. In drafting the letter, include the cross-appeal recommendation. See CCDM 36.2.6.2.1.3 for provisions regarding the letter.

  10. If an appeal is filed by the Commissioner or the taxpayer strictly for protective purposes, and the other party does not file a notice of appeal, the protective appeal should be dismissed.

36.2.6.2.4  (08-11-2004)
Assessment of Tax in Appealed Cases

  1. In appealed Tax Court cases:

    1. The Associate Chief Counsel attorney is responsible for ensuring that Area Counsel receives timely notification to initiate assessment.

    2. Area Counsel is responsible for ensuring that the appeals office receives timely notification.

    3. The Appeals office is responsible for the timely making of the assessment request to the appropriate Area Director's office.

  2. If an appellate court reverses or modifies the Tax Court's decision and remands to the Tax Court for entry of a new decision or for a rehearing, the case is generally transferred from the Associate Chief Counsel office to Area Counsel for any further required action, including assessment or abatement activity. See CCDM 36.2.5.12 for provisions regarding cases remanded to the Tax Court and CCDM 36.2.6.4.9 for assessment in remanded Tax Court cases.

36.2.6.2.4.1  (08-11-2004)
Control Records

  1. The Associate Chief Counsel office, the Technical Services Support Branch and assigned attorneys should maintain records (including but not limited to TLCATS) showing the assessment status of all cases on appeal. The Area Counsel office should also maintain such records.

36.2.6.2.4.2  (08-11-2004)
Overview of the Assessment Process in Appealed Tax Court Cases

  1. The procedures to be followed by Associate Chief Counsel attorneys and Area Counsel attorneys in completing their assessment responsibilities will vary depending on the classification of the case on appeal; i.e., Commissioner appeals, nonbonded taxpayer appeals, or bonded taxpayer appeals. The attorney should consult the sections below that are relevant to assessment in each type of case.

  2. In general, the following steps are taken:

    1. The Associate Chief Counsel attorney notifies the Area Counsel attorney of the need to assess by transmitting Form 9725 in non-TEFRA cases or Form 9724 in TEFRA cases. See Exhibits 35.11.1–256, Form 9725, and 35.11.1–257, Form 9724.

    2. The Area Counsel attorney then notifies the local appeals office of the need to assess by transmitting Form 1734 and the administrative file.

    3. The Appeals office then prepares Form 5403, Appeals Closing Record, and forwards it to the appropriate function in the Area Director's office. Form 5403 is a standard closing form designed to contain all of the information required to make a proper assessment.

    4. In a non-TEFRA case, information from Appeals' Form 5403 is used to prepare a Request for Quick or Prompt Assessment, Form 2859.

      Note:

      Definitions for quick and prompt assessments may be found in IRM 3.17.243.2. A quick assessment is always made when the statute of limitations on assessment is close to expiration. (See CCDM 36.2.6.2.4.6 for time limitations on assessment.) Requests for quick assessment are made by telephone, teletype, or facsimile when the statutory period for assessment will expire within 30 days.

    5. In a TEFRA case, the appeals office will prepare a Form 3210, Document Transmittal, to be sent to the Examination Support Unit (ESU) responsible for the key case requesting computation and assessment of deficiencies and interest at the investor level within one year of the date of the notice of appeal in Commissioner appeals and non-bonded taxpayer appeals and within one year of the date the Tax Court decision becomes final in bonded taxpayer appeals.

36.2.6.2.4.3  (08-11-2004)
Master File and Nonmaster File Assessments

  1. Master file assessments are eventually posted to the master file computer in Martinsburg, West Virginia, and appear on official transcripts of account. Nonmaster file assessments are relatively uncommon and are never posted to the master file.

  2. Even though quick and prompt assessments (as well as jeopardy and termination assessments) may be either master file or nonmaster file transactions, they are all made by the nonmaster file unit at each Internal Revenue Service Campus and are typically referred to as manual assessments.

  3. In quick and prompt assessments (as well as jeopardy and termination assessments), the person making the assessment request determines the date by which the assessment must be made. Associate Chief Counsel and Area Counsel attorneys can thus assure performance by a date certain.

  4. Absent a statute of limitations expiration date (see CCDM 35.9.2.2) or a date specified by the requester, nonmaster file units are required to make quick and prompt assessments no later than the second next regular 23C date. Note, however, that posting of the transaction on the Martinsburg computer may not occur for several weeks even though the assessment has been made.

36.2.6.2.4.4  (08-11-2004)
Verification of Assessment in Non-TEFRA Cases

  1. Preferred form of verification. When the field is notified that a non-TEFRA case has been appealed by the Commissioner or the taxpayer, the Associate Chief Counsel office requests verification that assessment has been made.

    1. The preferred form of verification is a copy of the taxpayer's transcript. The Appeals Closing Record (Form 5403) is simply a request by the Appeals office that assessment be made.

    2. Although it states the 23C date, Form 2859, Request for a Prompt or Quick Assessment, does not constitute verification that the assessment has been made.

  2. Verifying nonmaster file assessments. To verify these assessments, the attorney should call the contact person in the nonmaster file unit at the appropriate Internal Revenue Service Campus.

    1. If an assessment has been made, the contact person can provide the underlying document locator number (DLN), which in turn provides the date of assessment. See Exhibit 36.4.1–23, Interpreting a 14 or 13 Digit DLN.

    2. If paper verification is desired, the attorney can send Form 4338, Information or Certified Transcript Request, to request a copy of the unit ledger card.

  3. Exhibit 36.4.1–24 contains a list of contact persons for the Internal Revenue Service Campuses. The appropriate Internal Revenue Service Campus is the one at which the taxpayer filed the tax return for which a statutory notice of deficiency was issued and petitioned from, resulting in the Tax Court decision and the appeal.

  4. The DLN is a 14-digit number (in some cases, 13-digit) that confirms the existence of an assessment. The DLN is generated at the time the assessment occurs. Since telephone assessment procedures are recommended in the field for non-TEFRA bonded taxpayer appeal cases, Area Counsel will generally obtain the DLN at the time of assessment and provide it to the Associate Chief Counsel attorney. See Exhibit 36.4.1–24 for information on interpreting a 13 or 14-digit document locator number.

  5. To help the nonmaster file unit contact person locate the appropriate records, the attorney should provide the following information: taxpayers' name and address; taxpayers' social security number; type of tax; tax year or period; and approximate assessment date (such as a 23C date).

  6. In non-TEFRA bonded taxpayer appeal cases, the Associate Chief Counsel attorney must verify the fact of assessment and the date of assessment. Absent a transcript this is done by interpreting the document locator number (DLN).

  7. Transcripts of account showing master file assessments can be ordered through the Disclosure & Litigation Support Branch, Office of Associate Chief Counsel (P&A).

36.2.6.2.4.5  (08-11-2004)
Verification of Assessment in TEFRA Cases

  1. In Commissioner appeals and nonbonded taxpayer appeals, verification that the assessment has been made is not requested by or forwarded to the Associate Chief Counsel office. See CCDM 36.2.6.2.4.6 and CCDM 36.2.6.2.4.7.

  2. For bonded taxpayer appeals, see CCDM 36.2.6.4.8.

36.2.6.2.4.6  (08-11-2004)
Assessment in Commissioner Appeals

  1. This subsection describes the procedures for assessment in commissioner appeals.

36.2.6.2.4.6.1  (08-11-2004)
Associate Chief Counsel Attorney Responsibilities for Assessment in Commissioner Appeals

  1. The Associate Chief Counsel attorneys should follow procedures set forth in CCDM 36.2.6.2.4.7 regarding notification to the field to assess.

  2. The Associate Chief Counsel attorney is responsible for ensuring that Area Counsel receives timely notification to initiate assessment. The office practice is to assess at the earliest opportunity.

  3. The general rule is that the initiation of assessment activity must await the expiration of the 120-day cross-appeal period or a taxpayer cross appeal.

    1. In non-TEFRA cases, if the taxpayer does not file a cross-appeal, assessment should be made within the 60 days following the 120-day cross-appeal period.

    2. In TEFRA cases, assessment should be made within one year after the date of appeal.

  4. Table showing rules applicable to assessments in Commissioner appeals in non-TEFRA cases:

    If Then
    the Commissioner appeals a decision of the Tax Court in a non-TEFRA case and the taxpayer does not appeal, the deficiency (if any) as determined by the Tax Court is to be assessed within 60 days after the expiration of the 120-day cross-appeal period.
    the Commissioner appeals a decision of the Tax Court in a non-TEFRA case and the taxpayer files a cross appeal within the 120-day period and posts an adequate appeal (review) bond, assessment is to be made of any amounts not covered by the bond, but the assessment of any amounts covered by the bond is barred until the decision of the Tax Court becomes final.
    the Commissioner appeals a decision of the Tax Court in a non-TEFRA case, the taxpayer files a cross appeal within the 120-day period and posts an appeal (review) bond, but the bond does not fully cover the deficiency a decision must be made as to whether to file a motion with the Tax Court requesting an order that the bond be remedied, or to notify the field to initiate assessment activity in the same manner as a nonbonded taxpayer appeal. See CCDM 36.2.6.2.
    the taxpayer appeals only a portion of the tax liabilities determined by the Tax Court, see CCDM 35.9.2.4, Assessment in Cases Wherein not all Liabilities Determined by the Tax Court are Appealed.

  5. In TEFRA cases, the assessment must be made within one year of the date the decision becomes final.

  6. Verification of Assessment - Provisions regarding verification of assessment in Commissioner appeals are identical to those applicable to nonbonded taxpayer appeals. See CCDM 36.2.6.2.4.7 for these provisions.

36.2.6.2.4.6.2  (08-11-2004)
Area Counsel Attorney Responsibilities For Assessment in Commissioner Appeals

  1. The Area Counsel attorney's responsibilities for assessment in Commissioner appeals are the same as in nonbonded taxpayer appeals. See CCDM 36.2.6.2.4.7.2 for these provisions.

36.2.6.2.4.7  (08-11-2004)
Assessment in Nonbonded Taxpayer Appeals

  1. This subsection describes the procedures for assessment in nonbonded taxpayer appeals for Associate Chief Counsel Attorneys and Area Counsel Attorneys respectively.

36.2.6.2.4.7.1  (08-11-2004)
Associate Chief Counsel Attorney Responsibilities For Assessment in Nonbonded Taxpayer Appeals

  1. Form 9725 and Form 9724 are memoranda from the Associate Chief Counsel (P&A) to Area Counsel and are used to:

    1. Notify the field that a case has been appealed;

    2. Instruct the field regarding the assessment of tax, additions to the tax and interest in non-TEFRA cases, and tax and interest in TEFRA cases; and

    3. Remind the field to transmit the legal and miscellaneous law files to the Associate Chief Counsel office.

      Note:

      The administrative file is not to be sent to the Associate Chief Counsel office.

  2. Forms 9724 and 9725 state whether the appeal was taken by the Commissioner or the taxpayer and, if by the taxpayer, whether an appeal (review) bond was filed.

    1. When no bond is posted in a non-TEFRA case, Form 9725 specifically instructs the Area Counsel attorney to request the appeals office to request a quick assessment of the deficiencies and interest for the tax years on appeal.

    2. When no bond was filed in TEFRA partnership and S corporation cases, Form 9724 instructs Area Counsel to request the appeals office to request that the Examination Support Unit provide assessment within one year of the date of the notice of appeal.

    3. No assessment verification is required in TEFRA cases.

  3. An original and three copies of Form 9725 or Form 9724 are prepared by the Technical Services Support Branch in the Office of the Associate Chief Counsel (P&A) and, after approval by the attorney and reviewer, are distributed as follows:

    • The original and one copy to Area Counsel

    • One copy for the attorney's open folder

    • One copy to the Technical Services Support Branch

  4. Associate Area Counsel acknowledges receipt on and returns the copy of Form 9725 or Form 9724 to the Technical Services Support Branch, who then transmits it to the assigned attorney.

    Note:

    In Commissioner appeals, the Form 9725 or Form 9724 is not transmitted to the field until the expiration of the 120-day cross-appeal period.

  5. The Associate Chief Counsel attorney's responsibility to notify the field to initiate the assessment is met when the attorney transmits the original and one copy of Form 9725 (in non-TEFRA cases) or Form 9724 (in TEFRA cases) and receives an acknowledgment copy from Area Counsel.

36.2.6.2.4.7.1.1  (08-11-2004)
Verification of Assessment

  1. In non-TEFRA cases, Form 9725 requests that verification of assessment be sent to the Associate Chief Counsel (P&A). If verification has not been received in the Associate Chief Counsel office within 90 days after the form was sent to Area Counsel, a follow-up memorandum will be sent to the field, using the same procedures followed for preparing and transmitting the Form 9725.

  2. In non-TEFRA cases, upon receipt of the verification of assessment, the Associate Chief Counsel attorney should compare the assessment with the Tax Court decision to verify that the correct amount of tax was assessed for the correct tax year. Any discrepancies should be pointed out to the attorney's reviewer.

  3. If the Associate Chief Counsel office does not receive verification of assessment, the Associate Chief Counsel attorney is not required to request transcripts of account or otherwise attempt to seek verification that an assessment has, in fact, been made. The receipted copy of Form 9725 in non-TEFRA cases or Form 9724 in TEFRA cases is considered sufficient acknowledgment by the field that requested assessment and collection will be made by the responsible Service personnel.

  4. In TEFRA cases, verification that the assessment has been made is not requested by or forwarded to the Associate Chief Counsel office.

36.2.6.2.4.7.2  (08-11-2004)
Area Counsel Attorney Responsibilities For Assessment in Nonbonded Taxpayer Appeals

  1. Area Counsel is first notified of a nonbonded taxpayer appeal and requested to initiate assessment activity by a TLCATS message transmitted by the ACC appeals clerk. The TLCATS message contains much of the same information, in abbreviated form, as the Form 9725 or Form 9724, which is sent to Area Counsel by the Associate Chief Counsel attorney shortly after the TLCATS message.

  2. The Area Counsel attorney should acknowledge receipt and return the copy of the Form 9275 or Form 9724 to the Technical Services Support Branch, who will forward the receipted copy to the Associate Chief Counsel attorney.

  3. As in the case of nonappealed Tax Court decisions, upon completion of the TLCATS decision data screen (CDEC) by the field TLCATS operator, TLCATS event CL0010 is generated to serve as an additional reminder to the Area Counsel attorney that assessment activity should be initiated.

36.2.6.2.4.7.2.1  (08-11-2004)
Contact with Chief, Records Section, Appeals Office

  1. Upon notification of an appeal and that assessment is required, the Area Counsel attorney should contact the Chief of the Records Section of the local Appeals Office and then hand-carry (or send by courier) the administrative file to the Records Section, using Form 1734, Transmittal Memorandum, and noting Appealed Tax Court Case Assessment Must Be Made.

  2. The Records Section in Appeals is responsible for requesting assessment activity. In non-TEFRA cases, upon receipt of the administrative file and Form 1734, the Chief of the Records Section will request a quick assessment from the appropriate Area Director's office.

  3. Once verification of the assessment is received from the appropriate Area Director's office, the Chief of the Records Section will prepare a Transmittal Memorandum, and return the administrative file to the Area Counsel attorney. The administrative file will then contain the transcript verifying that the assessment was completed.

  4. In TEFRA cases the Chief of the Records Section will request assessment within one year of the appeal date.

36.2.6.2.4.8  (08-11-2004)
Assessment in Bonded Taxpayer Appeals

  1. When an adequate bond is posted, assessment cannot be made as to any deficiencies, additional amounts and interest covered by the bond, nor can a refund be made of any overpayment found by the Tax Court, until the decision of the Tax Court becomes final. Once the decision of the Tax Court becomes final, the Service has only 60 days in non-TEFRA cases and one year in TEFRA cases in which to assess the tax (plus any additional time obtained through tacking).

  2. Tax Court has jurisdiction to order the refund of an overpayment plus interest if the Service has failed to refund or credit the overpayment within 120 days after the decision of the Tax Court has become final. Because timely assessment and timely refunds depend on knowledge of when the Tax Court's decision becomes final, and because the finality of the decision depends upon the conclusion of the appellate proceedings and the date of such conclusion, it is imperative that the appellate proceedings be closely monitored.

36.2.6.2.4.8.1  (08-11-2004)
Associate Chief Counsel Attorney Responsibilities For Assessment in Bonded Taxpayer Appeals

  1. In completing the assignments discussed in this section, the Associate Chief Counsel and Area Counsel attorneys should review the provisions of CCDM 36.2.5.3 regarding the finality of Tax Court decisions, and CCDM 35.9.1, and CCDM 36.2.1.2.1 regarding appellate court judgments, opinions, and mandates. For purposes of simplicity, in the discussion that follows the terms opinion and decision are used interchangeably as they relate to the disposition of a case in a court of appeals. As discussed in CCDM 36.2.1.2.1, however, the terms opinion, judgment, and mandate are terms of independent significance.

36.2.6.2.4.8.1.1  (08-11-2004)
Initial Assignment

  1. The Associate Chief Counsel attorney assigned to a bonded taxpayer appeal will complete the initial phase of the assignment by following the steps outlined in CCDM 36.2.6.2.1. In the case of a bonded appeal, the appropriate box is checked on Form 9725 or Form 9724, notifying the field that the taxpayer has appealed and posted a bond and that assessment activity must await the finality of the Tax Court's decision.

36.2.6.2.4.8.1.2  (08-11-2004)
Notification to the Field To Assess

  1. As in all appealed Tax Court cases, the Associate Chief Counsel attorney is responsible for ensuring that timely notification to initiate assessment is received by Area Counsel. Since assessment in bonded taxpayer appeals cannot be initiated before the Tax Court decision becomes final, the Associate Chief Counsel attorney will be aided by two complementary checks on the notification process: TLCATS reminders and copies of appellate court documents furnished by the Department of Justice.

  2. The TLCATS reminder system generates an OP event, OP0010 (CHECK FOR APPELLATE DECISION), that will appear on an attorney's suspense/exception report 120 days after the date the taxpayer files the notice of appeal and posts an adequate bond. The Associate Chief Counsel attorney is responsible for completing the event by confirming whether the appellate decision has been entered or not (YE -- yes or NO -- no). If YE is entered, the event is permanently completed and not regenerated. If NO is entered, the event will regenerate every 75 days until the attorney enters YE.

  3. When the Associate Chief Counsel office receives from the Department of Justice the appellate court opinion that disposes of the case, the date of the opinion is entered on the CAPP screen. Thereafter, TLCATS will automatically generate a reminder that will appear on the attorney's suspense/exception report 110 days after the date of the opinion.

    1. The 110 days allows 90 days for a potential petition for certiorari plus a 20-day notification buffer.

    2. A suspense/exception report warning will be received by the attorney two weeks before the 110-day due date.

    3. At that point, unless an intervening action has occurred during the 110-day period that postpones the finality of the Tax Court decision (see (4), below), the attorney's secretary should prepare the legal and miscellaneous law files for closing. See instructions for preparing the legal files for closing at CCDM 36.2.6.5.1.

    4. On the 100th day, the attorney should call the Justice Department attorney handling the case on appeal to remind the attorney to return the file(s).

    5. If the Tax Court decision has become final, the attorney will complete the AP event (NOTIFICATION OF NEED TO ASSESS) by calling the Area Counsel attorney to advise of the need to assess.

    6. When verification that the assessment has been made (in non-TEFRA cases) is received from the Area Counsel attorney, the Associate Chief Counsel attorney will prepare a transfer memorandum and transmit the memorandum with the legal and miscellaneous law files to Area Counsel, thereby closing the case in the Associate Chief Counsel office.

  4. These procedures are discussed in detail in paragraphs (5) and (6), below. If the Tax Court decision has not become final during the 110-day period, see the following provisions.

  5. Intervening actions postponing finality of Tax Court decision. It is important to remember that the finality of the appealed Tax Court decision will depend upon whether or not a rehearing in the court of appeals or a writ of certiorari is petitioned and, if so, whether the petition is denied or granted. See CCDM 36.2.5.3.

  6. Table showing procedures to take when intervening actions occur:

    If Then
    a petition for rehearing has been filed, the AP event will have to be manually extended by the branch TLCATS operator pursuant to instructions by the branch chief. The attorney should then closely monitor the case by checking with the Department of Justice attorney on the status of the petition (i.e., whether it has been granted or denied).
    the petition for rehearing is denied, a new 90-day certiorari period will begin to run from the date of the denial.
    a petition for writ of certiorari is filed by either party, the petition date is entered on the TLCATS CERT screen, and TLCATS will automatically generate an OP event, OP0011, reminding the Associate Chief Counsel attorney to check for the denial of certiorari or the Supreme Court's opinion.

    Note:

    The remainder will appear on the attorney's suspense/exception report 45 days from the date the petition was filed and will regenerate every 45 days thereafter until the attorney completes the event by confirming that the petition has been denied or that the Supreme Court has issued its opinion.

  7. Once the date of denial of certiorari or the Supreme Court's opinion is entered on the CERT screen, TLCATS will generate an assessment and closing event, which will be due 30 days from the date of the denial of certiorari or the Supreme Court's opinion.

  8. Once all further appellate proceedings are concluded and the Tax Court decision has become final, the attorney should notify the field of the need to assess, prepare the files for closing, await receipt of assessment verification from Area Counsel in non-TEFRA cases, prepare the transfer memorandum, and then transmit the memorandum and the files to Area Counsel, thereby closing the case in the Associate Chief Counsel office.

  9. In TEFRA cases, it is the responsibility of the Associate Chief Counsel attorney to verify that appeals has been notified by Area Counsel to request assessment. These procedures are discussed in detail in CCDM 36.2.6.4.8.1.3.

    Note:

    It is also important to remember that if the court of appeals reverses or modifies the Tax Court decision, the case will generally be remanded to the Tax Court for entry of a new decision (with or without a rehearing). These cases are closed in the Associate Chief Counsel office at the expiration of the certiorari period or following any Supreme Court proceedings. They are closed by transfer to the appropriate Area Counsel office. Since assessment cannot be made until the new decision entered by the Tax Court has become final, assessment responsibility will remain with Area Counsel. Thus, if a bonded taxpayer appeal case is remanded to the Tax Court, attorneys should follow the procedures set forth at CCDM 36.2.5.12 for cases remanded to the Tax Court and recomputations rather than the procedures of this section. See also CCDM 36.2.6.4.9 for assessment in remanded cases.

36.2.6.2.4.8.1.3  (08-11-2004)
Verification of Assessment

  1. Unlike the situation in nonbonded taxpayer appeal cases in which assessments are made at the beginning of the appeal process, assessment cannot be made in bonded taxpayer appeals until the Tax Court's decision becomes final. Since finality may occur years after the appeal is taken, verification of the assessment is required of the Associate Chief Counsel attorneys in non-TEFRA cases to ensure that assessments in these cases do not slip through the cracks.

  2. Non-TEFRA cases. Once the Associate Chief Counsel attorney has notified Area Counsel that the decision has become final and assessment is needed, the Associate Chief Counsel attorney must verify that assessment has been made by receipt of the document locator number (DLN) from Area Counsel. This information will be conveyed by telephone. See Exhibit 36.4.1–24 for interpreting the DLN.

    If Then
    the Associate Chief Counsel attorney does not receive a DLN from Area Counsel, the Associate Chief Counsel attorney will have to verify the assessment by calling the nonmaster file unit at the appropriate Internal Revenue Service Campus. See CCDM 36.2.6.2.4.4.
    the case has been remanded to the Tax Court, assessment responsibility lies with Area Counsel and the Associate Chief Counsel attorney is not required to verify assessment.

  3. TEFRA cases. When a bonded case becomes final, the Associate Chief Counsel attorney will notify Area Counsel that the decision has become final and that assessment is needed. The Associate Chief Counsel attorney must verify that a request for assessment, i.e., a notation on Form 1734, has been forwarded to appeals by Area Counsel. Area Counsel will send a copy of the request for assessment to the Associate Chief Counsel office. It is impractical for counsel to verify assessments in TEFRA cases in light of the potentially large number of assessments that may need to be made (which is dependent upon the number of investors in the TEFRA entity) and the length of time (one year) over which assessments may be made. Thus, verification of assessments is not required.

36.2.6.2.4.8.2  (08-11-2004)
Area Counsel Attorney Responsibilities For Assessment in Bonded Taxpayer Appeals

  1. Area Counsel is first notified of a bonded taxpayer appeal by a TLCATS message. The TLCATS message contains much the same information, in abbreviated form, as the Form 9725 or Form 9724, which is sent to Area Counsel by the Associate Chief Counsel attorney shortly after the TLCATS message.

  2. In a bonded taxpayer appeal, the appropriate block is checked, notifying the field that assessment must await the finality of the Tax Court's decision.

  3. The Area Counsel attorney should acknowledge receipt on and return the copy of the Form 9725 or Form 9724 to the ACC appeals clerk.

36.2.6.2.4.8.2.1  (08-11-2004)
Initial Contact with Appeals Office

  1. Once notification of a bonded appeal is received, the Area Counsel attorney should send a copy of Form 2237, Transmittal Memorandum of Tax Court Cases to the Chief of the Records Section in the local Appeals Office for information purposes. The Records Section in Appeals is responsible for requesting assessments from the appropriate Area Director's office.

  2. If a TEFRA case settled under Tax Court Rule 248 is subsequently appealed and an adequate bond is filed, Area Counsel should immediately notify the Chief of the Records Section of the local Appeals Office that assessment should not be made. This is necessary because cases that are settled under Tax Court Rule 248 are forwarded to Appeals prior to the expiration of the appeal period with instructions to assess as soon as the appeal period expires. See CCDM 35.9.3.5.1.

36.2.6.2.4.8.2.2  (08-11-2004)
Receipt of Notification of Need to Assess

  1. The Associate Chief Counsel attorney will notify the Area Counsel attorney by phone that an assessment should be made.

  2. An Area Counsel attorney closing event parallels the Associate Chief Counsel office AP event. When the Associate Chief Counsel office AP event is generated by the appellate decision date on the CAPP screen, TLCATS will automatically generate an Area Counsel attorney closing event CL (ASSESS-BONDED).

  3. Like the Associate Chief Counsel office AP event, the field CL event will appear on the Area Counsel attorney's weekly suspense/exception report and will also be due 110 days after the date of the appellate decision. Thus, the CL event acts as a backup to the Associate Chief Counsel office AP event.

    Note:

    An additional CL event is generated for the Area Counsel attorney's reviewer to ensure that reviewers in the field receive reminders through weekly suspense reports of necessary bond assessment dates.

36.2.6.2.4.8.2.3  (08-11-2004)
Notification to Appeals to Assess

  1. Upon receipt of notification of the need to assess and in order to complete the TLCATS CL event, the Area Counsel attorney should immediately inform the Chief of the local Appeals Office of the need for an assessment. For bonded appeals, the Chief of the Appeals Office is responsible for ensuring that the Chief of the Records Section requests the assessment.

  2. The Area Counsel attorney should then hand carry (or send via courier) the administrative file to the Chief of the Appeals Office, together with Form 1734, Transmittal Memorandum, noting on the form Tax Court Case/Assessment Must Be Made Before [date].

  3. For non-TEFRA cases the date will be the 60th day following the date the Tax Court decision became final.

  4. For TEFRA cases the date will be one year from the date the Tax Court decision became final.

36.2.6.2.4.8.2.4  (08-11-2004)
Assessment in Non-TEFRA Cases

  1. In a non-TEFRA case, the Chief of the Records Section will send the administrative file for final closure to the appropriate Area Director's office, together with a request for a telephonic assessment and a request for verification of the assessment.

  2. Once the verification of assessment is received, the Chief of the Records Section will prepare a Form 2828, Transmittal Memorandum, and send a copy of the transcript to the Area Counsel attorney, verifying that the assessment has been made.

  3. The Area Counsel attorney, in turn, should inform the Associate Chief Counsel attorney, by telephone, of the DLN.

36.2.6.2.4.8.2.5  (08-11-2004)
Assessment in TEFRA Cases

  1. In a TEFRA case, the Chief of the Records Section will send the key case administrative file for final closure to ESP in the Examination Division of the Area Director's office. The Chief of Records will also prepare Form 3210 requesting computation and assessment of deficiencies and interest within one year of the date the decision becomes final.

  2. In TEFRA cases, there is no requirement that the Area Counsel attorney conduct verification procedures.

36.2.6.2.4.8.2.6  (08-11-2004)
Monitor Collection Activity and Notify Tax Court

  1. Upon receipt of verification of assessment in non-TEFRA cases or verification that Area Counsel has sent a request to Appeals to make assessments in TEFRA cases, the Associate Chief Counsel attorney will close the case in the Associate Chief Counsel office by transfer to Area Counsel.

  2. Area Counsel will receive a transfer memorandum, along with the legal and miscellaneous law files. The legal file will include a copy of the appeal bond.

  3. Following assessment and transfer of the case, Area Counsel is responsible for monitoring collection activity. A TLCATS case status code entitled BONDED-PENDING COLLECTION automatically generates a TLCATS event, RE0025, to remind the Area Counsel attorney to check with Technical and Insolvency and ascertain the status of the collection account.

  4. Area Counsel is responsible for notifying the Tax Court when an appeal bond may be released. Accordingly, Area Counsel must promptly send a letter to the Tax Court notifying the court that payment has been made and that the bond may be released.

  5. Alternatively, Area Counsel should contact the Associate Chief Counsel (P&A) for assistance in moving the court to have the underlying deficiencies satisfied from the bond proceeds.

  6. In cases where payment is guaranteed by a commercial surety, upon the satisfaction of the liability as finally determined, plus interest and additional amounts, Area Counsel should prepare a letter notifying the surety of the satisfaction of the liabilities. The letter should be addressed and mailed to the surety and a copy of the letter should be sent to:

    The Honorable Chief Judge
    United States Tax Court
    400 Second Street, N.W.
    Washington, D.C. 20217

    1. The court will then release the bond and surety.

  7. In cases where payment is gua