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

36.2.6.2.4 
Assessment of Tax in Appealed 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  (05-16-2012)
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 36.4.1–14, Form 9725, and 36.4.1–15, Form 9724.

    2. The Area Counsel attorney then notifies the local appeals office of the need to assess by sending Form 1734, Transmittal Memorandum, 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 Form 2859, Request for Quick or Prompt Assessment.

      Note:

      Definitions for quick and prompt assessments may be found in IRM 3.17.243.2, Reversal of Erroneous Abatements. 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, Time Limitation on Assessment) 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 Document Locator Number (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, Contact Information for Service Centers, 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 36.4.1–23, Interpreting a 14 or 13 Digit Document Locator Number (DLN).

  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  (05-16-2012)
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 , Finality of Tax Court Decisions and Mandamus, regarding the finality of Tax Court decisions; and CCDM 35.9.1, Tax Court Opinions and Decisions, and CCDM 36.2.1.2.1, Federal Rules of Appellate Procedure, 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  (05-16-2012)
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, Finality of Tax Court Decisions and Mandamus.

  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, Cases Remanded to the Tax Court/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  (05-16-2012)
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 36.4.1–23, Interpreting a 14 or 13 Digit Document Locator Number (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  (05-16-2012)
Initial Contact with Appeals Office

  1. Once notification of a bonded appeal is received, the Area Counsel attorney should send a transmittal memorandum 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, Annotating the TEFRA Case File.

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  (05-16-2012)
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 guaranteed by Government securities, upon the satisfaction of the liability as finally determined, plus interest and additional amounts, the Area Counsel attorney should prepare a letter notifying the Tax Court of the satisfaction of the liabilities. The letter should be addressed and mailed to the Chief Judge of the Tax Court. (See address above.) The court will then direct the release of the bonds and return the collateral posted in lieu of sureties.

  8. Where the taxpayer wants to satisfy the unsatisfied portion of the liability (including interest and additional amounts) out of the collateral posted in lieu of sureties on the appeal bond, the taxpayer must submit a motion to this effect. Either attached to the motion or provided by the respondent will be a statement of account, often in the form of a certificate of assessment and payments. When appropriate, the court will enter an order for liquidation and distribution of collateral in accordance with the request of the parties. To the extent that taxpayer's request is incorrect or imprecise, the attorney must prepare a response to the taxpayer's motion to provide the court with the information needed for the order for distribution of the proceeds of the liquidation.

  9. Where the taxpayer fails to satisfy the unsatisfied portion of the liability (including interest and additional amounts) and payment is guaranteed by commercial surety, the Internal Revenue Manual provides instruction for the steps to be taken by the Service in obtaining satisfaction of the liability from the commercial surety.

36.2.6.2.4.8.2.7  (08-11-2004)
Closing Bonded Cases in the Field

  1. The field's TLCATS closing event reminds the Area Counsel attorney (and reviewer) to assess, but final closing should be postponed until the bond has been released or applied towards payment.

36.2.6.2.4.9  (08-11-2004)
Assessment in Cases Remanded to the Tax Court

  1. In both Commissioner and taxpayer appeals (whether bonded or not), if there is a reversal or modification of the Tax Court's decision by the appeals court, a new decision must be entered by the Tax Court (unless the Supreme Court subsequently reverses the court of appeals and affirms the Tax Court's decision).

  2. When the final appellate action in a case results in the need for the entry of a new decision, the case is transferred by the Associate Chief Counsel office to Area Counsel.

  3. Area Counsel will assume jurisdiction of the case for purposes of any further Tax Court action and for assessment or abatement activity.

  4. Once the Tax Court enters its new decision, assessment responsibility remains with Area Counsel as in the situation of nonappealed cases. See CCDM 36.2.5.12, Cases Remanded to the Tax Court/Recomputations.

36.2.6.2.4.10  (08-11-2004)
Assessment in Cases Involving Defective Appeal Bonds

  1. The Associate Chief Counsel attorney is responsible for reviewing the appeal bond. See CCDM 36.2.6.2.1.2. If the bond is defective in any manner (e.g., amount, expiration date, surety not approved) the attorney should immediately bring this to the attention of his reviewer.

  2. A decision will be made in the Associate Chief Counsel office as to whether a motion should be prepared requesting the Tax Court to order that the bond be remedied, or whether to notify the field to initiate assessment activity in the same manner as a nonbonded taxpayer appeal. In either event, the Associate Chief Counsel attorney will advise the Area Counsel attorney as to the appropriate action to be taken.

36.2.6.2.5  (05-16-2012)
Closing Procedures Specific to Tax Court Appeals

  1. In general, Associate Chief Counsel attorneys are responsible for closing all appealed Tax Court cases; Area Counsel is responsible for closing nonappealed Tax Court cases.

  2. While, in cases in which an appeal has been filed, the files cannot be completely prepared for closing at the time of forwarding to the Associate Chief Counsel office, the following action should be taken:

    1. The Associate Chief Counsel attorney should send a letter to the Tax Court requesting the withdrawal of all necessary exhibits when the decision becomes final.

    2. A list should be made of such exhibits that are not to be placed in the miscellaneous law file upon closing but which are to be returned to the source from which obtained. As to each such exhibit there should be specified the name and address of the person or office to which the document is to be returned upon its withdrawal.

    3. The files should be placed in appropriate order. If there are related files or documents that may be needed in handling the case on appeal, such files and documents should be specifically listed, giving the source from which secured, so that they may be properly returned upon the closing of the case.

    4. Original unaudited returns must be returned to the Area Director. If needed on appeal, a copy is sufficient.

  3. During the pendency of an appeal, the Chief Counsel's legal file is in the possession of the Appellate Section of the Tax Division, and the administrative file is retained in the field by either Area Counsel or appeals. During this period, the Associate Chief Counsel attorney maintains an "open folder" for all documents related to the case on appeal. After the conclusion of all appellate proceedings, the Chief Counsel's legal file is returned to the Associate Chief Counsel office by the Justice Department, with a closing letter.

  4. Closing a case in the Associate Counsel office means that the case is closed on the records of the Associate Chief Counsel. Appealed Tax Court cases are closed in three ways, depending on the type of case involved.

    1. Remanded cases are closed by transfer to the Area Counsel office which handled the case in the Tax Court. A transfer memorandum is prepared and sent to Area Counsel for this purpose.

    2. Bonded taxpayer appeal cases are also closed by transfer to Area Counsel. Copies of the transfer memorandum in these cases are directed to the appropriate appeals and Area Director offices. Additionally, Form 9253, Appellate Court Closing Memorandum, (see CCDM 36.2.6.5.2) is sent to the appropriate Appeals office and copies of the form are direct to both Area Counsel and the appropriate Area Director.

    3. All other appealed cases are closed to the appropriate Appeals office by closing memorandum with copies of the memorandum directed to the appropriate Area Counsel and Area Director offices.

36.2.6.2.5.1  (05-16-2012)
Preparing and Transmitting Closed Files

  1. If the Tax Court decision has become final (i.e., the case has not been remanded to the Tax Court), a copy of the decision should be inserted at the top of the legal file, together with verification of assessment in non-TEFRA cases (a transcript of account) or, if applicable, a copy of the taxpayer's bond. In TEFRA cases, verification that Area Counsel sent a request to Appeals to make the necessary assessments should be included in the legal file.

  2. Once the attorney's secretary has prepared the files for closing, they should be submitted to the attorney's reviewer, who will ensure that the files are in proper order. The files are then forwarded to the Disclosure & Litigation Support Branch of the Office of the Associate Chief Counsel (P&A). The Disclosure & Litigation Support Branch will complete Form 9253, Appellate Court Closing Memorandum, and transmit the files to the Records Section for further transmittal to the closed files area.

36.2.6.2.5.2  (05-16-2012)
Closing Memorandum for Tax Court Cases

  1. Form 9253, Appellate Court Closing Memorandum, is used by the Associate Counsel office to close cases to the appropriate Appeals office. The form is completed by the Disclosure & Litigation Support Branch, following instructions provided by the attorney with the legal and miscellaneous law files.

  2. Generally, Form 9253 is directed to the chief of the Appeals office, with copies to the appropriate Area Director and Area Counsel. At the time of final closing, the Disclosure & Litigation Support Branch will distribute copies of the closing memorandum to the Technical Services Support Branch in the Office of Associate Chief Counsel (P&A), the Docket, Records & User Fee Branch of the division, and the responsible attorney. When the addressee Area Counsel office signs and returns a copy of the closing memorandum acknowledging receipt, the Technical Services Support Branch will make a record of the receipt and enter the date of closing on the records of the case. If receipt of the closing memorandum has not been acknowledged within 30 days of transmittal, the Technical Services Support Branch will follow up with a further request for acknowledgment, while forwarding a duplicate copy of the original closing memorandum.

    1. When a declaratory judgment case is closed in the Associate Chief Counsel office, Form 9253 is addressed to the office from which the Office of the Associate Chief Counsel (P&A) received the case, with copies to the other offices concerned with the case.

    2. If a taxpayer appeal is dismissed due to the untimely filing of the notice of appeal, the Tax Court decision will become final 90 days after entry by the Tax Court. The explanation of the reason for this date should be noted on the Form 9253.

    3. If the case has been disposed of by administrative settlement pursuant to an offer-in-compromise based solely upon the inability of the taxpayer to pay the deficiency determined by the Tax Court, this fact should be noted on the closing memorandum. Copies of Justice Department documents relating to the administrative settlement should be attached to the closing memorandum.

    4. Upon the Tax Court's decision becoming final after appellate review, there may be litigation problems in the collection of the deficiency as finally determined. Since the Area Counsel office has collection litigation responsibility, that office should be notified of any factors that occurred during the handling of the case on appeal which would be of assistance to the Area Counsel office. Such notification may be made by notation on the Form 9253 or by separate memorandum upon closing, if necessary.

36.2.6.2.5.3  (08-11-2004)
Time for Closing Tax Court Appeals

  1. General rule. With the exceptions listed in (2) and (3), below, all appealed Tax Court cases should be closed in the Associate Counsel office as soon as the Tax Court decision becomes final. See CCDM 36.2.5.3, Finality of Tax Court Decisions and Mandamus.

  2. Cases dismissed on stipulation of the parties. Although the Tax Court's decision is technically not final until the expiration of the certiorari period, these cases should be closed immediately upon the entry of dismissal in the court of appeals.

  3. Cases won completely by the taxpayer. Although the Tax Court's decision is technically not final until the expiration of the certiorari period, these cases should be closed upon notification that the Solicitor General has decided not to authorize the filing of a petition for writ of certiorari. See CCDM 36.2.2.1, Petition for Certiorari Generally.

  4. TLCATS events. TLCATS will remind the Associate Chief Counsel attorney when to close a case. The due date to forward the files to the Disclosure & Litigation Support Branch or to Area Counsel (in remanded cases and bonded taxpayer appeals) is 110 days after the court of appeals decides the case. The 110-day period accounts for the 90-day certiorari period, plus a reasonable time for retrieving the legal file from the Department of Justice. On the 100th day, the attorney should call the Justice Department attorney who handled the case on appeal as a reminder to return the file(s). The Disclosure & Litigation Support Branch then has an additional 21 days to complete the formal closing.

36.2.6.2.5.4  (05-16-2012)
Closing Bonded Cases in the Associate Chief Counsel Office

  1. The Associate Chief Counsel attorney should immediately take steps to close the case in the Associate Chief Counsel office once the following events have occurred:

    1. The Tax Court decision has become final.

    2. The field has been notified of the need to assess.

    3. The Associate Chief Counsel attorney has received verification of the assessment in non-TEFRA cases or verification that a request for assessment has been forwarded to appeals by Area Counsel in TEFRA cases.

  2. Bonded taxpayer appeals are closed by transfer to the Counsel office that handled the case in the Tax Court. Closing is accomplished by transmitting the legal and miscellaneous law files to the office that handled the case in Tax Court, together with a transfer memorandum. Copies of the transfer memorandum should be directed to the appropriate Appeals office and Field Director's office. An Appellate Court Closing Memorandum, Form 9253, is prepared by the Disclosure & Litigation Support Branch in the Associate Chief Counsel (P&A) and sent to the appropriate appeals office, with copies directed to the appropriate Counsel office and Area Director. See CCDM 36.2.6.5.2 for provisions regarding Form 9253. When the memorandum and files are sent to Associate Area Counsel, the branch TLCATS operator will change the case status code on TLCATS to 44 (BONDED-PENDING COLLECTION).

    • See CCDM 36.2.4, Closing Appeal Cases, and CCDM 36.2.6.5.1.

    • Transfer memorandum to the field. The Associate Chief Counsel attorney should prepare a memorandum addressed to Associate Area Counsel (or to the Associate Chief Counsel ( P&A) in cases handled in the Tax Court by a P&A attorney), to the attention of the trial attorney. Copies should be directed to the local Appeals office and Area Director's office. The memorandum should be approved and signed by the attorney's reviewer for the Associate Chief Counsel (P&A). A copy of the completed memorandum should be forwarded to the Technical Services Support Branch, who will note the appeal card to reflect the transfer of the case. The wording of the memorandum reproduced at Exhibit 36.4.1–25, Transfer Memorandum (Bonded Appeal), should be followed for all transfer memoranda in non-TEFRA bonded taxpayer appeal cases. The attorney should contact Branch 6 or 7, Associate Chief Counsel (P&A) before preparing a transfer memorandum in a bonded TEFRA taxpayer appeal case.

36.2.6.2.5.5  (05-16-2012)
Closing CDP Cases to the Office of Appeals After Tax Court Decision is Final

  1. A CDP case is returned to Collection after the case is closed by the Office of Appeals, Processing Service (APS), and the Transaction Code (TC) 520 is reversed by Appeals with the entry of a TC 521.

    Note:

    When the court of appeals enters a decision in favor of the Government in a CDP case, it is imperative that the case is returned to Collection as soon as possible. The date that the Tax Court decision becomes final is the date that the section 6330(e)(1) suspension of the collection statute of limitations and the levy prohibition ends.

  2. In appealed Tax Court CDP cases the Appellate Section of the Department of Justice Tax Division is responsible for litigating the appeal. The Office of Associate Chief Counsel ( P&A) attorney monitors the taxpayer’s appeal and is responsible for ensuring that the trial attorney assigned to the case receives timely notification when the Tax Court CDP decision is final. See CCDM 36.2.5.3 , Finality of Tax Court Decisions and Mandamus, for instructions on determining when a Tax Court decision is final. The trial attorney is then responsible for ensuring that the appropriate APS office receives timely notification.

  3. See CCDM 36.2.6.2.5.5.3 for additional instructions on what must be provided to APS upon notification that the Tax Court CDP decision is final. When APS receives notification that the Tax Court CDP decision is final, the appealed case is closed and the freeze code is reversed, allowing collection to resume.

36.2.6.2.5.5.1  (05-16-2012)
Determining When the Court of Appeals Judgment is Final

  1. The P&A attorney assigned to the appealed Tax Court CDP case should regularly check the court of appeals docket sheets (accessed by PACER) to monitor whether a judgment or order has been issued.

  2. The P&A attorney should determine whether the judgment or order can be considered final for purposes of filing a petition for writ of certiorari by checking the court of appeals docket sheet to see if the taxpayer has filed a petition for rehearing. If a timely petition for rehearing is filed, the court of appeals judgment or order becomes final when the order denying rehearing is entered on the court of appeals docket or when a separate judgment or order is entered after rehearing.

    Note:

    A petition for panel rehearing or a petition for rehearing en banc may be filed within 45 days after the entry of a judgment or order on the docket unless an order shortens or extends the time. See Fed. R. App. P. 35 and 40.

  3. Once a final judgment or order has been issued, the P&A attorney will call the attorney in the Tax Division Appellate Section assigned to the case to confirm the finality of the court of appeals decision and that no petition for rehearing was filed. If a final judgment or order has been issued, the P&A attorney should confirm the precise date it was entered on the court of appeals docket.

36.2.6.2.5.5.2  (05-16-2012)
After a Final Court of Appeals Judgment or Order is Entered

  1. When the P&A attorney has confirmed that a final judgment or order favorable to the Government has been entered, the attorney should inform the trial attorney assigned to the case of the final judgment or order.

    Note:

    This is merely a status update, and no action is required of the trial attorney at this point.

  2. The P&A attorney should also ensure that the date the final judgment or order was entered on the court of appeals docket is input into TL-CATS. The entry of this date will move the case into status code 12 – Decided Circuit Court.

  3. The P&A attorney should continue to monitor the case to determine when the Tax Court CDP case becomes final. The earliest a Tax Court decision can become final is the date the 90-day period for filing a petition for writ of certiorari expires, as measured from the date of the final court of appeals judgment or order. See CCDM 36.2.5.3, Finality of Tax Court Decisions and Mandamus, for instructions on determining when a Tax Court decision is final.

36.2.6.2.5.5.3  (05-16-2012)
After the Tax Court CDP Decision Is Final

  1. When the Tax Court CDP decision becomes final, the P&A attorney should notify the trial attorney. See CCDM 36.2.5.3, Finality of Tax Court Decisions and Mandamus, for instructions on determining when a Tax Court decision is final. At this time, the P&A attorney should inform the trial attorney of (a) the date the Tax Court CDP decision became final, (b) the need to send to Appeals the administrative file, Tax Court decision and any opinion, and the court of appeals judgment or order and any opinion, and (c) the need to request the CDP case be closed by Appeals to Collection. See CCDM 35.9.3.6, Closing Collection Due Process Cases. The P&A attorney should also provide a copy of the court of appeals judgment or order to the trial attorney.

    Note:

    If the taxpayer filed a petition for a writ of certiorari, and it was granted, the P&A attorney should also provide a copy of the Supreme Court mandate.

  2. After the P&A attorney informs the trial attorney that the Tax Court CDP decision is final, the trial attorney should, in an expeditious manner, send to the APS office specified on the orange sheet in the administrative file:

    • Administrative file

    • Copy of final Tax Court decision, including any opinion

    • Copy of final judgment or order of court of appeals, including any opinion

    • If applicable, a copy of the Supreme Court order mandate, issued after the petition for a writ of certiorari is granted

    • A [manually-generated Transmittal] Form 1734 specifying the date the Tax Court decision became final, which is the date the suspension of the collection statute of limitations ended, and requesting that the CDP case be closed in Appeals.

    Note:

    It is important to also clearly communicate any actions required pursuant to the final CDP decision. For example, in situations when an alternative resolution of the CDP case is reached or situations when the CDP decision includes a liability determination, costs, or sanctions, the trial attorney should include with the transmittal Form 1734 any information that APS will need to process the alternative resolution or the additional assessment. See CCDM 35.9.3.6, Closing Collection Due Process Cases, for specific instructions on the information that should be transmitted to APS in these situations.

  3. When APS receives notification that the Tax Court CDP decision is final, the appealed case is closed and the freeze code is reversed.


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