36.2.6  Area Counsel and Associate Chief Counsel Responsibilities in Tax Court Cases on Appeal

Manual Transmittal

May 16, 2012

Purpose

(1) This transmits revised CCDM 36.2.6, Appeal/Certiorari Recommendations; Area Counsel and Associate Chief Counsel Responsibilities in Tax Court Cases on Appeal.

Material Changes

(1) CCDM 36.2.6.2.1.2 was revised to clarify that section 7485(a) does not apply in Collection Due Process (CDP) cases.

(2) CCDM 36.2.6.2.5.4 was revised to update references to the Office of Associate Chief Counsel (Procedure & Administration).

(3) CCDM 36.2.6.2.5.5 was added to set out procedures for ensuring that CDP cases, which have been appealed, are closed in Appeals once a Tax Court decision is final.

(4) Procedures in CCDM 36.2.6.2.4.8.2.1, CCDM 36.2.6.2.5 and CCDM 36.2.6.2.5.1 were updated.

(5) The tables in CCDM 36.2.6.2.1.4, CCDM 36.2.6.2.4.6.1, CCDM 36.2.6.2.4.8.1.2, CCDM 36.2.6.2.4.8.1.3 and CCDM 36.2.6.2.4.8.2.6 were reformatted to comply with the requirements of Section 508 of the Rehabilitation Act.

(6) The references in CCDM 36.2.6.1.5, CCDM 36.2.6.2.1.3, CCDM 36.2.6.2.2, CCDM 36.2.6.2.2.1.3, CCDM 36.2.6.2.4.2 and CCDM 36.2.6.2.5.2 were corrected or updated.

(7) Titles and hyperlinks were added to 89 references throughout the section.

Effect on Other Documents

CCDM 36.2.6 dated August 11, 2004 is superseded. This revision incorporates procedures contained in Chief Counsel Notice CC-2009-010.

Audience

Chief Counsel

Effective Date

(05-16-2012)

Deborah A. Butler
Associate Chief Counsel
(Procedure & Administration)

36.2.6.1  (08-11-2004)
Area Counsel Responsibilities

  1. See CCDM 36.1.1.5, Responsibilities of Division Counsel in Appeal Cases, for responsibilities of Area Counsel in appeal cases in general.

36.2.6.1.1  (08-11-2004)
Review of Tax Court Opinions

  1. See CCDM 35.9.1.2, Review of Tax Court Opinions.

36.2.6.1.2  (08-11-2004)
Motions for Reconsideration of Findings or Opinion

  1. Motions for reconsideration of findings or opinion are discussed fully at CCDM 35.9.1.2.4, Motions for Reconsideration of Findings or Opinion. When prepared by the Area Counsel attorney, the motions must be reviewed by the appropriate Associate Chief Counsel and approved by the Chief Counsel.

36.2.6.1.3  (08-11-2004)
Area Counsel Office

  1. The Area Counsel for the field office that tried the case may recommend appeal of cases decided adversely to the Commissioner. Some Division Counsel require that the Area Counsel recommendation receive Division Counsel approval. If an appeal recommendation is made, it must be submitted by a separate memorandum explaining the basis for the recommendation in light of the considerations set forth at CCDM 36.2.1.1, Preparation of Appeal Letters.

  2. Whether or not an appeal recommendation is made, the Area Counsel attorney should not advise the taxpayer or the taxpayer's counsel of the status of a Commissioner appeal until a final decision has been made by the Solicitor General. For this purpose, the form memorandum recommending no appeal (see Exhibit 36.4.1–10, "No Appeal" Memorandum) does not constitute a final decision on appeal.

  3. If files have not been previously forwarded to the Associate Chief Counsel office, the Area Counsel attorney should transmit the legal and miscellaneous law files for appealed Tax Court cases to the Department of Justice. The files for an appealed case must contain the trial transcript and all exhibits. In addition, when the Area Counsel attorney is notified by the Associate Chief Counsel office of a taxpayer appeal, the Area Counsel attorney should ensure that an entered copy of the Tax Court decision (i.e., signed and dated) is in the legal file.

  4. The Area Counsel office should maintain records of the assessment status of each appealed case. Area Counsel's responsibilities regarding assessment and actions on remand are discussed at CCDM 36.2.6.2.4 and CCDM 36.2.5.12, Cases Remanded to the Tax Court/Recomputations.

36.2.6.1.4  (08-11-2004)
Motions to Vacate or Revise Decision

  1. These motions are discussed fully at CCDM 35.9.1.3.2.1, Motions to Vacate or Revise Decision. When prepared by the Area Counsel attorney, such motions must be reviewed in the Associate Chief Counsel office with subject matter jurisdiction and, if the decision has become final, approved for filing by the Associate Chief Counsel (P&A).

36.2.6.1.5  (05-16-2012)
Protective Appeals and Cross-Appeals

  1. These appeals are discussed fully at CCDM 36.2.6.2.3, Protective Appeals and Cross-Appeals in Tax Court Cases. Because the Field attorney is more familiar with all of the nuances of the case, he or she has the primary responsibility for the initiation of protective action in a case or in a related case (whether or not the related case was consolidated and tried with the principal case). Division Counsel's recommendation should be conveyed by memorandum to the Associate Chief Counsel attorney assigned to the case.

36.2.6.1.6  (08-11-2004)
Follow-up Responsibilities

  1. Area Counsel attorneys should consult the provisions of CCDM 36.2.5.12, Cases Remanded to the Tax Court/Recomputations, and CCDM 36.2.6.2.4 for assessment responsibilities.

36.2.6.2  (08-11-2004)
Associate Chief Counsel Responsibilities

  1. The Associate Chief Counsel office has the responsibility of referring taxpayer appeals to the Department of Justice for defense and preparing recommendations to the Department of Justice regarding the prosecution of appeals from adverse Tax Court decisions. See CCDM 35.9.1.2, Review of Tax Court Opinions, for provisions regarding the review of Tax Court opinions and decisions.

  2. The Associate Chief Counsel attorney recommending appeal is responsible for the filing of the notice of appeal or protective notice of appeal. See CCDM 36.2.5.6, Notices of Appeal, and CCDM 36.2.5.6.4, Time for Filing Notice of Appeal.

  3. The responsible attorney should prepare the appeal recommendation early, preferably before the decision is entered. The appeal recommendation should be made to the Associate Chief Counsel no later than 45 days after the decision is entered. If an appeal recommendation is later than 45 days after the decision is entered, the responsible attorney must explain the delay and supply an interim report to the Associate Chief Counsel. This 45-day report is in addition to the automated TLCATS tracking system.

  4. On rare occasions, the Associate Chief Counsel attorney may be responsible for preparing documents relating to the record in Commissioner appeals and filing these documents with the Tax Court, or taking necessary action to obtain an adequate record in taxpayer appeals. See CCDM 36.2.5.9, Record on Appeal.

36.2.6.2.1  (08-11-2004)
Taxpayer Appeals

  1. When a taxpayer appeals, the Clerk of the Tax Court serves the notice of appeal upon the Commissioner. Service on behalf of the Government is accepted by the Docket, Records & User Fee Branch, Associate Chief Counsel (P&A).

  2. The appeal package served by the Tax Court contains:

    • The notice of appeal

    • The notice of filing of the appeal

    • The docket entries

    • A copy of any appeal bond filed by the taxpayer, together with the Tax Court's handwritten notation on the appeal documents showing whether or not a bond was filed

  3. The Records Unit forwards the appeal package to the Technical Services Support Branch of the Associate Chief Counsel (P&A). The appeal is recorded on an appeal card (index card file) and on TLCATS. A notation is made on the appeal card as to whether or not the appeal is bonded, and Y (bonded) or N (not bonded) is entered on the TLCATS appeal screen (CAPP).

  4. A TLCATS message is transmitted to the Area Counsel office that handled the case in the Tax Court which includes the following information:

    • That the taxpayer filed a notice of appeal

    • The date of filing

    • The court of appeals to which the appeal was taken

    • Whether or not an appeal (review) bond was filed

    • Directions for assessment if no bond was filed

    • A request that verification of the assessment be sent to the Associate Chief Counsel (P&A)

    • A request that the legal files for the case be transmitted to the Department of Justice

  5. The Technical Services Support Branch transmits the appeal package and the original and three copies of Form 9725, Non-TEFRA Cases Only (Memorandum), (Form 9724, TEFRA Cases Only (Memorandum)) to the responsible Associate Chief Counsel office. A TLCATS sheet is generated, which lists the attorney or paralegal responsible for preparing the notification to the Department of Justice of the taxpayer's appeal.

36.2.6.2.1.1  (08-11-2004)
Associate Chief Counsel Attorney/Paralegal Assignment

  1. The responsible attorney/paralegal assigned to the case should take the following steps.

36.2.6.2.1.1.1  (08-11-2004)
Check Documents

  1. The attorney or paralegal should have:

    • The TLCATS or other assignment sheet

    • The three notices comprising the appeal package

    • Form 9725 (Form 9724 for TEFRA cases)

    • A copy of the Tax Court opinion

    • A copy of the Tax Court decision

    • A copy of the appeal bond, if one has been filed

  2. Form 9725 (Form 9724). These forms are included as Exhibits 36.4.1–14 and 36.4.1–15, and instructions regarding their use can be found at CCDM 36.2.6.2.4.7. Form 9724 is used exclusively in TEFRA cases.

    Note:

    In TEFRA cases, only the tax matters partner/person, a notice partner/shareholder, or a five percent group may seek review on behalf of a TEFRA entity of a decision by a court. Section 6226(g). The Associate Chief Counsel attorney should recommend dismissal of an appeal filed by any other person unless ratification by a proper person or group is appropriate. The recommendation of dismissal should be made in the letter notifying the Department of Justice of the taxpayer's appeal, which is discussed below.

36.2.6.2.1.1.2  (08-11-2004)
Check Jurisdiction and Venue

  1. The attorney/paralegal should verify that the taxpayer's notice of appeal was timely filed and that the court of appeals requested to review the decision is the circuit of proper venue. The Clerk of the Tax Court will ordinarily file an untimely notice of appeal or one filed for an improper venue. Therefore, the responsibility is on the Associate Chief Counsel attorney to determine whether the court of appeals has jurisdiction and venue of the case, and if not, to make recommendations (in the letter of notification to the Department of Justice) to have the appeal dismissed. See CCDM 36.2.5.8, Venue on Appeal, for a discussion of venue for appeal purposes.

    Note:

    A notice of appeal that refers to the opinion or its filing date but is filed after entry of the decision should be viewed as an appeal from the decision.

  2. If the notice of appeal is not timely filed, that fact should be set forth in the letter to the Department of Justice with a recommendation that an issue be raised as to the jurisdiction of the court of appeals. See CCDM 36.2.5.6.4, Time for Filing Notice of Appeal.

36.2.6.2.1.2  (05-16-2012)
Appeal Bond

  1. An appeal bond is an irrevocable, open-ended promise of the taxpayer to pay the deficiencies finally determined to be due, together with any interest, additional amounts, or additions to tax provided for by law. It continues the stay on assessment and collection until the appellate proceedings are concluded and the Tax Court decision becomes final. See section 7485 and Tax Court Rule 192.

  2. The taxpayer must file the appeal bond with the Tax Court on or before filing the notice of appeal.

  3. The Tax Court fixes the amount of the bond. The amount may not exceed double the amount of the deficiency that is the subject of the appeal. See section 7485.

  4. Section 7485(a), which requires a taxpayer to post an appeal bond in order to stay collection, does not apply to collection due process (CDP) cases. By its terms, section 7485 applies only to the collection (and assessment) of deficiencies, not assessed liabilities that are the subject of a CDP case. In a CDP levy case, levy is suspended during the pendency of appeals, unless the IRS obtains a lifting of the suspension pursuant to section 6330(e)(2).

36.2.6.2.1.2.1  (08-11-2004)
Security for Appeal Bonds

  1. The taxpayer must provide security for a bond, which may be in any of the following forms:

    • A commercial surety (a surety bond that must be underwritten by a surety company approved by the Treasury Department -- see below).

    • Collateral in the form of U.S. bonds or notes (which must meet statutory requirements -- see below).

    • An irrevocable commercial letter of credit of a lawfully chartered and insured financial institution. See Form 9 and 10 of the Tax Court Rules of Practice and Procedure.

36.2.6.2.1.2.2  (08-11-2004)
Multiple Decisions or Tax Years

  1. The taxpayer may have had more than one docketed case before the Tax Court, and the dockets may have been consolidated for purposes of trial, briefing, and opinion. A separate decision will be entered for each docket number. In addition, the taxpayer may have had more than one year before the Tax Court under a single docket number. The taxpayer may appeal one or more of the decisions and may post a bond for one or more of the appeals.

    1. If any one of the decisions is not appealed, the deficiencies as determined by the Tax Court in that decision will be assessed in the same manner as nonappealed cases. See CCDM 36.2.6.2.4.

    2. If any one of the decisions is appealed without the posting of an appeal bond covering the liabilities in the decision, the deficiencies determined by the Tax Court in that decision will be assessed in the same manner as nonbonded taxpayer appeals. See CCDM 36.2.6.2.4.7.

36.2.6.2.1.2.3  (08-11-2004)
Appeal Bonds in Settled TEFRA Cases

  1. Cases 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. Thus, if such a case is appealed and an appeal bond is filed, the Area Counsel attorney with responsibility for the case must notify the Chief of the Records Sections in the local Appeals Office immediately that assessments should not be made.

36.2.6.2.1.2.4  (08-11-2004)
Review of Appeal Bond

  1. The Associate Chief Counsel attorney responsible for reviewing an appeal bond must coordinate with the Associate Chief Counsel (P&A) for approval of the amount and form of the bond.

  2. In reviewing any proposed appeal bond or an appeal bond that has already been filed with the court, the attorney should ensure that the following requirements are satisfied:

    1. In a non-TEFRA case, the bond must cover all years, taxes and penalties involved in the appeal. Furthermore, the bond is required to be in such an amount as to cover potential interest assessments relating to the deficiencies. See Poinier v. Commissioner, 90 T.C. 63 (1988); Barnes Theatre Ticket Service Inc. v. Commissioner, 50 T.C. 28 (1968). Except in rare and unusual circumstances (for example, where an overpayment has been determined but not refunded or credited to the taxpayer), respondent will not agree to an appeal bond in an amount less than double the determined deficiency, since it is likely that interest assessments will at least equal, and usually exceed, the deficiency amount.

    2. In a TEFRA case, the bond must be in an amount sufficient to cover the aggregate of all the deficiencies of all partners/shareholders who are parties to the TEFRA proceeding.

    3. The surety or letter of credit arrangement must be open-ended, that is, not subject to an expiration date that could occur during the pendency of the appeal or a reasonable time thereafter to effectuate collection. This requirement assures that the bond will remain in force until all liabilities, as finally determined, are satisfied. Additionally, the commercial surety must be one approved by the Department of the Treasury. See Treasury Department Circular 570 for a list of acceptable sureties and the amounts of bonds for which they are approved, and The Home Group, Inc. v. Commissioner, 92 T.C. 940 (1989). Even if the surety company is listed in Circular 570, it is not an acceptable surety if the surety company is itself already primarily liable for the deficiency, e.g., as a member of the affiliated group of the taxpayer.

    4. If collateral in the form of U.S. bonds or notes is posted as security, the collateral must meet statutory requirements. See Treasury Department Circular 154. Other forms of collateral not consisting of obligations of the United States or obligations unconditionally guaranteed by the United States are not acceptable as collateral for an appeal bond. See Estate of Kahn v. Commissioner, 60 T.C. 964 (1973).

36.2.6.2.1.2.5  (08-11-2004)
Defective Appeal Bond

  1. If the bond fails to satisfy any or all of the requirements described above, the Service may either move the Tax Court to set aside its approval of the bond, See The Home Group, Inc. v. Commissioner, 92 T.C. 940 (1989), or assess any liabilities not covered by the bond.

  2. Any motion to set aside approval of a bond must be approved by the Associate Chief Counsel (P&A) prior to filing.

36.2.6.2.1.3  (05-16-2012)
Letter to Department of Justice

  1. An appeal letter to the Department of Justice should be sent within five days of the filing of the taxpayer's notice of appeal.

  2. Unlike Commissioner appeals, in taxpayer appeals it is usually not necessary to go into a detailed discussion of the facts or the law. It is sufficient if the letter includes the following:

    1. Caption of the case;

    2. The court to which the appeal is directed;

    3. A statement as to whether the notice of appeal was filed timely or not, including the date the decision was entered, the date the notice of appeal was filed and, if the notice of appeal was filed more than 90 days after the decision date, the particulars of any post-decision motions that may have tolled the appeal period, or any relevant calendar facts (e.g., the 90 th day was a Sunday);

    4. The locality of the taxpayer's legal residence or principal place of business at the time the Tax Court petition was filed;

    5. The issues believed to be involved in the appeal; and

    6. The name and address of the taxpayer's attorney or the taxpayer's address if he is not represented by counsel.

  3. Any problems concerning what is appealed, timeliness, venue, or the substantive issues should be mentioned.

  4. If the case involved a related issue decided adversely to the Commissioner and approval of the action on decision recommending acquiescence on such related issue has been withheld, the letter to the Department of Justice should set forth the related issue or issues on appeal. The letter will further request that the Department of Justice inform us within 30 days from the date of the letter whether it believes that release of the action on decision on the related issue will adversely affect defense of the appeal. If it appears that the release of acquiescence on the related issue will have the result of requiring administrative settlement of other cases, that information should also be set forth in the defense letter. See CCDM 36.3.1, Actions on Decision.

  5. If the case involved an issue decided adversely to the Commissioner, the letter should include a statement that Chief Counsel does not intend to cross-appeal. If there is a need for cross-appeal, the attorney should consult CCDM 36.1.1.2.2, Protective Appeals and Cross-Appeals.

  6. Attachments to the letter should include copies of the notice of appeal, notice of transmission of the record, the tax court's opinion and the appeal bond, if one has been posted.

  7. A sample letter for taxpayer appeals is reproduced at Exhibit 36.4.1–16, Taxpayer Appeal Letter.

36.2.6.2.1.4  (05-16-2012)
Files

  1. Upon receipt of Form 9724 or 9725, the Area Counsel attorney will forward the legal and miscellaneous files to the following address:

    Appellate Section, Tax Division
    Department of Justice
    P.O. Box 502
    Washington, D.C. 20044

  2. The letter transmitting the files to Justice should direct that upon completion of appellate proceedings the files should be promptly returned for closing to the following address:

    Associate Chief Counsel (P&A)
    Attn: Technical Services Support Branch
    1111 Constitution Ave., N.W.
    Washington, D.C. 20224.

    Note: See Exhibit 36.4.1–17, Sample Transmittal of Files to Justice.

  3. The administrative file in taxpayer appeal cases remains in the field for assessment purposes. When assigned a taxpayer appeal, the attorney/paralegal should prepare and maintain an open folder, a file for a case on appeal. This file should contain copies of the three notices comprising the appeal package, the TLCATS assignment sheet, copies of both the Tax Court opinion and decision, a copy of the completed Form 9725 (Form 9724 in TEFRA cases), a copy of the letter to the Department of Justice, and a copy of the appeal bond, if one has been filed. Any further documents pertaining to the case on appeal should be placed in this temporary file until the legal file is returned at the close of the appellate proceedings.

36.2.6.2.1.4.1  (08-11-2004)
Follow-Up Letter with Transmission of Files

  1. If the legal file and any miscellaneous law files are received from the field contrary to the procedure set forth in section CCDM 36.2.6.2.1.4, the Associate Chief Counsel attorney should prepare a one–paragraph transmittal letter and send the files to the Department of Justice. See Exhibit 36.4.1–17, Sample Transmittal of Files to Justice.

36.2.6.2.2  (05-16-2012)
Commissioner Appeals - Adverse Opinion Review

  1. When the Tax Court decides a case adversely to the Commissioner, in whole or in part, the case is assigned to an attorney in the appropriate Associate Chief Counsel office for the preparation of an adverse opinion review memorandum. The purpose of the adverse opinion review memorandum is twofold: to determine whether any or all the issues decided adversely to the Commissioner should be appealed; and to determine whether an action on decision should be prepared. For a full discussion see CCDM 36.3.1, Actions on Decision.

  2. The attorney should prepare a brief memorandum setting forth the issues decided adversely to the Commissioner; the pertinent facts of the case; the Service's and taxpayer's position if it will add to the review; the court's holding and reasoning; and the attorney's analysis on why the court's decision is correct or, if not correct, why it is clearly erroneous or legally incorrect. While the attorney should briefly note any issues that the Service won, the attorney need not provide analysis on these issues. If the Associate Chief Counsel attorney's recommendation is to appeal any or all of the issues, the adverse opinion review memorandum will conclude with this recommendation.

  3. Area Counsel's recommendation should be stated in the adverse opinion review memorandum. If the Area Counsel attorney disagrees with the Associate Chief Counsel attorney's recommendation, see CCDM 31.1.4.2, Coordination within the Office of Chief Counsel.

  4. If no appeal is recommended, the Associate Chief Counsel attorney should complete the "No Appeal" memorandum reproduced at Exhibit 36.4.1–10. This memorandum also requires the attorney to provide a recommendation on issuing an AOD. See CCDM 36.3.1, Actions on Decision. The no appeal memorandum should be submitted to the attorney's reviewer, together with the adverse opinion review memorandum. If approved by the reviewer, the no appeal memorandum is forwarded to the Technical Services Support Branch and a copy is sent to the appropriate Area Counsel office.

  5. If the recommendation is to appeal, and it is approved by the attorney's reviewer, the attorney will draft a letter to the Department of Justice requesting authority to prosecute the appeal. If the attorney's recommendation is not to appeal, and the recommendation is approved by the attorney's reviewer, the no appeal memorandum discussed in paragraph (4), above, is submitted to the Technical Services Support Branch and constitutes the appeal recommendation.

  6. Occasionally, when the adverse opinion is significant in terms of Service practice or policy and the recommendation is not to appeal, the attorney should prepare a memorandum for the signature of the Associate Chief Counsel. This memorandum explains why, despite the significant loss, appeal is not warranted. This should be completed in sufficient time so that an appeal could be timely filed if deemed warranted by the responsible senior office executives.

36.2.6.2.2.1  (08-11-2004)
Associate Chief Counsel Attorney Assignment - Commissioner Appeals

  1. The Associate Chief Counsel attorney should check the legal and miscellaneous law files to be sure all exhibits and transcripts are accounted for. If not, see CCDM 36.2.5.9.1, Docketing and Filing the Record on Appeal.

  2. The Associate Chief Counsel attorney should request from the Area Counsel office any documents thought necessary for processing the case in the court of appeals. Transmit these documents with the appeal letter and the files through the various stage of review and, ultimately, to the Department of Justice.

36.2.6.2.2.1.1  (08-11-2004)
Letter to Department of Justice

  1. See CCDM 36.2.1 , Appeal Recommendations in General, for general instructions for preparing an appeal letter.

  2. The letter should clearly set forth the basis for appeal by showing how the Tax Court's opinion is in error and the administrative need for appeal. The letter should state the date of the Tax Court's decision and the venue on appeal. The attorney should consult CCDM 36.2.5.8, Venue on Appeal, for a general discussion of venue for appeal purposes, and CCDM 36.2.5.8.1, Stipulating to Venue, for stipulations of venue in Commissioner appeals.

  3. Unless reflected on enclosed documents, provide the name and address of the taxpayer's attorney or, if the taxpayer is not represented by counsel, the name and address of the taxpayer.

  4. State that in the event that the Department of Justice has not completed its consideration of the appeal request prior to the expiration of the appeal period, the Associate Chief Counsel attorney will file a protective notice of appeal on a specified date.

  5. If an action on decision has been prepared or will be prepared that recommends acquiescence on an issue related to the issue on appeal, state that approval of acquiescence on the related issue is being withheld until the conclusion of the appellate proceedings. See CCDM 36.3.1, Actions on Decision.

  6. Review of the letter must be completed by the functional Associate Chief Counsel no later than 45 days after entry of the Tax Court's decision. The letter must be approved and signed by the Chief Counsel, and received by the Department of Justice by the 60th day after entry of the Tax Court's decision.

36.2.6.2.2.1.1.1  (08-11-2004)
Optional Preliminary Letter to Department of Justice

  1. If the issue lost by the Commissioner is significant, and if it is anticipated both that the appeal letter will be delayed beyond the 60-day period and that there may be a possible conflict with the Department of Justice on the question of an appeal, the attorney will need to prepare a short preliminary letter to the Department of Justice as soon as possible after the filing of the Tax Court's opinion.

  2. The preliminary letter may, in some cases, be sent even before the Tax Court decision has been entered.

  3. Prepare the letter for the reviewer's signature.

  4. The letter should be brief and state that

    1. A copy of the Tax Court's opinion is attached,

    2. It is anticipated that the Service will recommend an appeal, and

    3. That the Department of Justice may want to begin its consideration of the case prior to the receipt of our formal recommendation.

36.2.6.2.2.1.2  (08-11-2004)
Preparation and Filing of the Notice of Appeal

  1. Prepare a notice of appeal at the same time the appeal letter is drafted. See CCDM 36.2.5.6, Notices of Appeal, for general provisions regarding the form, filing, and service of a notice of appeal.

  2. Generally, the notice of appeal does not specify which issues are being appealed, enabling later selection of issues.

  3. The notice of appeal should be signed in the names of the Chief Counsel and the Assistant Attorney General, Tax Division, Department of Justice, by the attorney's branch chief, who must be admitted to practice in the United States Tax Court. The branch chief must sign his or her own name and list his or her Tax Court bar number. See Exhibit 36.4.1–5, Notices of Appeal — Tax Court.

  4. If the notice of appeal pertains to more than one docket number, see CCDM 36.2.5.6.1, Multiple Docket Numbers.

  5. Determine the proper venue for the appeal. See CCDM 36.2.5.8, Venue on Appeal, for general provisions for determining venue. For venue stipulations in Commissioner appeals, the following procedures should be followed:

    1. When time permits, attempt to obtain approval of the venue stipulation from the Department of Justice.

    2. Send a letter to the Department of Justice with an appropriate recommendation for the stipulation of venue in the proposed appeal, and setting forth the basis for the recommendation prior to filing the notice of appeal.

    3. If time does not permit formal clearance with the Department of Justice, file an appeal in both the court of proper venue and in the court of preferred venue and then make the venue recommendation to the Department of Justice.

  6. Hand-carry the notice of appeal to the Technical Services Support Branch of the Office of Associate Chief Counsel (P&A) for filing with the Tax Court at least five days before the expiration of the 90-day appeal (or 120-day if a cross-appeal) period. Ideally, delivery should occur by the 45th day after the entry of the Tax Court's decision.

  7. The time in which the notice of appeal must be filed may be shortened or extended in certain limited circumstances. See CCDM 36.2.5.6.4, Time for Filing Notice of Appeal.

  8. Upon receipt of the notice of appeal from the attorney, the Technical Services Support Branch will send the notice to the Tax Court at least five days prior to the expiration of the appeal period.

    1. The Tax Court will stamp and return copies of the notice to the Associate Chief Counsel office.

    2. The Technical Services Support Branch will forward one stamped receipted copy to the responsible attorney and one to the Department of Justice.

      Note:

      The timely filing of a notice of appeal is so important that it cannot be overemphasized that the attorney has the primary responsibility for ensuring that the notice of appeal is received and processed by the Technical Services Support Branch and that the notice of appeal is filed with the Tax Court. This responsibility is not met by reliance on others, such as TLCATS operators, clericals, messengers, or those who maintain backup suspense systems. If the responsible attorney has not received written confirmation by the 87th day (117th day for cross-appeals) after entry of decision that the notice of appeal was filed with the Tax Court, the attorney should call the Technical Services Support Branch and request that the filing be checked immediately with the Tax Court. If, in fact, the notice of appeal was not filed, the attorney and reviewer must immediately prepare a replacement notice of appeal and personally deliver to the Tax Court (directly to the Appellate Section on the ground floor) the notice of appeal for filing by the 88th day (118th day for cross-appeals) after entry of decision.

  9. Some circuits have a very short time for perfecting the appeal. Thus, whenever the Department of Justice is unaware at least five days before the notice of appeal is filed that a notice of appeal is to be filed, it is necessary to hand-carry the stamped notice of appeal, when received, to the Department of Justice.

36.2.6.2.2.1.3  (05-16-2012)
Notification to the Field

  1. The Area Counsel office that handled the case in the Tax Court will receive notification of a Commissioner appeal by a TLCATS message and Form 9725 (Form 9724 in TEFRA cases).

  2. After filing the notice of appeal, the Associate Chief Counsel attorney should await the expiration of the 120-day cross-appeal period and then transmit Form 9725 or Form 9724 to the field. Form 9725 and 9724 are reproduced at Exhibits 36.4.1–14 and 36.4.1–15, respectively. See CCDM 36.2.6.2.4.7.1 for a full discussion of the purpose of these forms and instructions for completing and transmitting them. With the exception of the time for transmitting the form to Area Counsel, those instructions also pertain to Commissioner appeals. The purpose of awaiting the expiration of the cross-appeal period is explained at CCDM 36.2.6.2.4.6 and is based on different assessment procedures.

36.2.6.2.2.1.4  (08-11-2004)
Files

  1. Send the legal and miscellaneous law files to the Department of Justice with the letter requesting authority to prosecute the appeal. The administrative file remains in the field.

  2. Prepare and maintain an open folder, which is the temporary file for a Tax Court case on appeal. This substitutes for the legal file that has been forwarded to the Department of Justice. The file should contain the following:

    • TLCATS assignment sheet

    • Copies of the Tax Court's opinion and decision

    • A copy of the letter to the Department of Justice requesting authority to prosecute the appeal

    • The receipted copy of the notice of appeal

    • A completed Form 9724 or 9725

    • Any other documents relating to the case

    • Any further documents received by the attorney in connection with the case

  3. Upon completion of the appellate litigation, the materials in the open folder will be merged into the legal file after it is returned by the Department of Justice.

36.2.6.2.2.1.5  (08-11-2004)
Dismissal of Commissioner Appeals

  1. If the notice of appeal was filed before the Solicitor General authorized appeal, and the Solicitor General later decides against appeal, the appeal must be dismissed. When the Department of Justice has formally notified the Chief Counsel that the Solicitor General has declined to authorize further prosecution of an appeal and it becomes definite that the appeal will not be further prosecuted, immediately notify the Clerk of the Tax Court by letter of the Solicitor General's decision. This notification is provided so that the record on appeal can be retained in the court if it has not already been transmitted to the court of appeals. See CCDM 36.2.5.9, Record on Appeal.

  2. The attorney's reviewer should sign the letter in the name of the Chief Counsel, and a copy should be placed in the attorney's open folder for the case. See a sample letter at Exhibit 36.4.1–7, Letter to Tax Court (Record on Appeal).

  3. The Department of Justice usually dismisses appealed cases without any action by the Associate Chief Counsel attorney. Nevertheless, call the Department of Justice to ascertain whether any further action is necessary to effectuate dismissal of the appeal.

  4. See CCDM 36.2.5.11, Dismissal of Appeals in Tax Court Cases.

36.2.6.2.2.1.6  (08-11-2004)
Circuits with Special Requirements

  1. Attorneys with appeals to the Seventh, Eighth, or Ninth Circuit should pay close attention to the circuit court rules for prosecuting appeals to be aware of special requirements.

  2. Following are several exhibits illustrating some of the requirements for the three circuits mentioned above.

    • Exhibit 36.4.1–18 , Ninth Circuit Representation Statement, is a sample form that complies with the Ninth Circuit local rules

    • Exhibit 36.4.1–19, Seventh Circuit Docketing Statement, is a sample statement for the Seventh Circuit

    • Exhibit 36.4.1–20, Eighth Circuit Appellant’s Form A, Appeal Information Form, is a sample that complies with the Eighth Circuit local rules

    • Exhibit 36.4.1–21, Eighth Circuit Appellee’s Form B, Appeal Information Form, is a sample form that complies with the Eighth Circuit local rules

36.2.6.2.3  (08-11-2004)
Protective Appeals and Cross-Appeals in Tax Court Cases

  1. The difference between a protective appeal and a cross-appeal is discussed in CCDM 36.1.1.2.2, Protective Appeals and Cross-Appeals. As noted, the need for protective action is not limited to Tax Court cases. Protective appeals may also be necessary in related district court and Court of Federal Claims cases involving the same basic issues or transactions. Because Chief Counsel attorneys have different responsibilities for cases filed in Tax Court, the procedures for filing protective appeals and cross-appeals in Tax Court cases are addressed separately in this section.

  2. Care must be exercised in determining whether a protective appeal or a cross-appeal should be filed, as the procedure to be followed will differ for each. A protective appeal is treated in the same manner as a regular Commissioner appeal, and the procedures for an appeal letter, etc., are required. See CCDM 36.2.1, Appeal Recommendations in General, and CCDM 36.2.6.2.2.

  3. The Associate Chief Counsel attorney should carefully examine each case to determine whether protective action is required because the need for such action is not evident in every case. Heavy reliance will be placed on the recommendations of Area Counsel attorneys due to their greater familiarity with all aspects of the case.

36.2.6.2.3.1  (08-11-2004)
Examples of Situations Requiring Protective Action

  1. The following are examples of situations requiring protective or cross-appeals.

  2. Disputes over the year in which an item should be taxed or a gift deemed to be made. If the tax years in question are included in the same docket, a cross-appeal should be recommended. If the years are in different dockets, a protective appeal will be necessary.

  3. Disposition of an item for one year causes a correlative change in another tax year (either as to the petitioner or as to a related taxpayer). This is often found in cases involving the correct tax treatment of an element affecting basis (and which may not be covered by sections 1311–1314). As a general rule, even when the revenue may possibly be protected under such statutory provisions, it may be appropriate to file a notice of appeal or to take other protective action.

  4. Income items or deductions may be either that of taxpayer A or taxpayer B, but not both. This includes alimony, partnerships, joint ventures, certain community property income questions, stockholder-corporation issues, dependency exemptions, and goodwill versus a covenant not to compete.

  5. Determination of one tax correlatively affects the computation of a related tax. For example, with respect to income and estate taxes, and estate and gift taxes.

  6. When the Service presents alternative theories to support a deficiency in a single year and the court sustains the deficiency based on one of the theories, but rejects another theory. The tax liability computed under the alternative theories may be different amounts. When the liability redetermined by the court is less than the amount contended under an alternative theory, it may be advisable to file an appeal or cross-appeal to sustain the greater tax.

  7. When the alternative theories result in the same amount of tax, the proper course of action is to expand the taxpayer appeal letter to the Department of Justice by urging the department to continue the argument of the alternative theory rejected by the Tax Court or recommending a remand to the Tax Court to decide the alternative theory should the taxpayer prevail on appeal. A cross-appeal is not necessary since our alternative arguments can be raised on defense of the taxpayer's appeal notwithstanding rejection of the arguments by the Tax Court. Cross-appeals are only appropriate where the taxpayer has appealed an issue or issues and we wish to raise an issue or issues which, if successful, would increase the deficiency, not simply keep it as determined by the Tax Court.

  8. When the Service has recommended to the Department of Justice that a case be appealed and the Solicitor General has not acted on the recommendation before the expiration of the time to file a notice of appeal, the Service will file a protective notice of appeal in a Tax Court case. See CCDM 36.2.6.2.2.

36.2.6.2.3.2  (08-11-2004)
Other Types of Protective Actions

  1. It may be necessary to consider protective action to preserve the Commissioner's interests in multiple petition cases when one taxpayer seeks an interlocutory appeal.

    Example:

    Assume deficiency notices are issued to former spouses who have taken inconsistent positions, and their cases are consolidated for trial, briefing, and opinion. When the former husband files a motion for certification of a question for appeal, the Service should request that the Tax Court withhold entry of a final decision in the former wife's case pending determination of the former husband's motion for certification. See CCDM 36.2.5.4, Interlocutory Appeals from Tax Court Orders.

  2. When protective action other than protective or cross-appeal is necessary, the attorney's reviewer should be consulted prior to beginning the assignment.

36.2.6.2.3.3  (08-11-2004)
Whipsaw Cases

  1. Not all cases in which a protective appeal situation could arise justify the filing of a protective appeal. Whipsaw cases are per se among those that often do not justify protective action.

    Example:

    In a situation involving the characterization of divorce payments (alimony vs. property settlement), if the losing party indicates no appeal will be filed, no protective appeal need be filed against the prevailing spouse.

  2. In other whipsaw situations, protective appeals need not be filed where there is no appreciable possibility that the losing party could prevail on appeal. Judgment in these situations, considering the effort of the appeal, and the amount of revenue at stake, is required.

  3. In certain whipsaw situations, the Service may take a position as to which taxpayer should prevail. In some situations, the Service expresses no preference.

    Example:

    In the situation where the Service determines a deficiency and penalty against both A and B, but takes the position that A is correct, care must be taken when recommending protective appeal action. If the Tax Court agrees with the Service and holds for A, the Service may nevertheless file a protective appeal of A's case in order to protect the revenue in the event of a successful appeal by B. In such a case, the Service should only appeal the deficiency and not the negligence penalty. At least one court of appeals has criticized the Service for imposing the negligence penalty in such a situation.

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, Notices of Appeal, 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, Notices of Appeal — Tax Court. As a protective appeal generally involves multiple docket numbers, the attorney should pay particular attention to CCDM 36.2.5.6.1, Multiple Docket Numbers.

  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, Time for Filing Notice of Appeal.

    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, Time for Filing Notice of Appeal.

    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, Appeal Recommendations in General. 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, Preparation of Appeal Letters, 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, Cases Remanded to the Tax Court/Recomputations, for provisions regarding cases remanded to the Tax Court and CCDM 36.2.6.4.9 for assessment in remanded Tax Court cases.


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