4.8.8  Miscellaneous Responsibilities (Cont. 1)

4.8.8.12 
Formal and Informal Technical Assistance

4.8.8.12.2 
Request for Advice From Taxpayers

4.8.8.12.2.1  (12-06-2013)
Determination Letters

  1. A "determination letter" is a written determination issued by a director that applies the principles and precedents previously announced by the Service to a specific set of facts. It is issued only when a determination can be made based on clearly established rules in a statute, a tax treaty, the regulations, a conclusion in a revenue ruling, or an opinion or court decision that represents the position of the Service.

  2. As used above, the term "Director" refers to the Director, Field Operations, LB&I; Area Director, Field Examination, SB/SE; Chief, Estate and Gift Tax Operations, SB/SE; Chief, Employment Tax Operations, SB/SE; Chief, Excise Tax Operations, SB/SE; Director, Compliance, W&I; Director, International Compliance, Strategy and Policy; Director, Employee Plans Examinations; Director, Exempt Organizations Examinations; Director, Federal, State and Local Governments; Director, Tax Exempt Bonds; or Director, Indian Tribal Governments, as appropriate.

  3. Determination letters will be issued by each director's office in response to taxpayer requests. Specific guidance related to the issuance/submission of determination letters is found in the first revenue procedure issued each year.

4.8.8.12.2.1.1  (12-06-2013)
Determination Letters Issued

  1. Directors issue determination letters in response to taxpayers’ written requests on completed transactions that affect returns over which they have examination jurisdiction.

  2. A director may issue a determination letter on the replacement, even though not yet made, of involuntarily converted property under IRC 1033 if the taxpayer has filed an income tax return for the year in which the property was involuntarily converted.

4.8.8.12.2.1.2  (12-06-2013)
Determination Letters Not Issued

  1. Directors normally do not issue determination letters on the tax consequences of proposed transactions.

  2. A director will not issue a determination letter in response to any request if the following occurs:

    1. It appears that the taxpayer has directed a similar inquiry to other business units or area offices.

    2. The same issue involving the same taxpayer or a related taxpayer is pending in a case in litigation or before an area office.

    3. The determination letter is requested by an industry, trade association, or similar group.

    4. The request involves an industry-wide problem.

  3. Under no circumstances will a determination letter be issued unless it is clearly shown that the request concerns a return that has been filed or is required to be filed and over which the director has, or will have, examination jurisdiction.

4.8.8.12.2.1.3  (12-06-2013)
Guidelines for a Determination Letter

  1. The first revenue procedure issued each year contains specific information about requesting a determination letter. This section provides an overview of the information needed.

  2. Certain information as follows is required in all requests for a determination letter:

    1. Names, addresses, telephone numbers, and taxpayer identification numbers of all interested parties;

    2. The annual accounting period, and the overall method of accounting for maintaining the accounting books and the filing of federal income tax returns, of all interested parties;

    3. A description of the business reasons for the transaction;

    4. A detailed description of the transaction; and

    5. Copies of all contracts, wills, deeds, agreements, instruments, other documents, and foreign laws.

  3. All material facts and documents must be included in the taxpayer's initial request or in supplemental letters. These facts must be accompanied by an analysis of their bearing on the issue(s), specifying the provisions that apply.

  4. The request must state whether, to the best of knowledge of both the taxpayer and the taxpayer's representative, the same issue is in an earlier return of the taxpayer.

  5. The request must state whether the same or similar issue was previously ruled on or requested, or is currently pending.

  6. The request must state whether it involves an interpretation of a substantive provision of an income or estate tax treaty.

  7. The request must state if the taxpayer advocates a particular conclusion, an explanation of the grounds for that conclusion and the relevant authorities to support it must be included.

  8. The request should inform the Service about, and discuss the implications of, any authority believed to be contrary to the position advanced by the taxpayer.

  9. The request should identify any pending legislation that may affect the proposed transaction.

  10. The request must be signed and dated by the taxpayer or the taxpayer's authorized representative. A stamped signature is not permitted.

  11. The request and any subsequent change submitted must be accompanied by a declaration signed under penalties of perjury signed by the taxpayer, not the taxpayer's representative. A stamped signature is not permitted.

  12. A request for a determination must be accompanied by a statement indicating the deletions desired. Because the text of the determination letter is open to public inspection under IRC 6110, Public Inspection of Written Determinations, the Service makes deletions required by IRC 6110(c) from the text before it is available for inspection. If the deletions statement is not submitted with the request, the request will be closed within 21 days.

  13. Generally, a request for a determination letter requires an original and one copy to be submitted.

  14. SB/SE and W&I taxpayers send their determination letter requests to their local SB/SE office. Appendix D of the first revenue procedure issued each year contains the addresses for the appropriate SB/SE offices.

  15. LB&I taxpayers send their requests for determination letters to the address listed in the first revenue procedure of the current year. See http://www.irs.gov/irb/2013-01_IRB/ar06.html

  16. User fees are required to be paid with determination letter requests. See Appendix A of the first revenue procedure issued each year for the required fee amount.

4.8.8.12.2.1.4  (12-06-2013)
Technical Services' Responsibilities

  1. Technical Services employees who handle the determination letter requests need to ensure that a careful distinction is made between requests for determination letters and general information requests (defined in IRM 4.8.8.12.2.2, Information Letter, below). If it appears to be a request for general information, the assigned reviewer should treat it as such and should not apply the provisions for a determination letter as noted above.

  2. Determination letters are signed by the Technical Services group manager as delegated by SB/SE Delegation Order 4.54 (Rev. 2). See http://mysbse.web.irs.gov/RefLibrary/imd/delorders/functional/specialtyprograms/21697.aspx

  3. The text of determination letters is open to public inspection under IRC 6110. The Service makes deletions from the text before it is made available for inspection. Accordingly, the reviewer must provide the taxpayer with Notice 438, Notice of Intention to Disclose, along with a copy of the determination letter with proposed deletions.

4.8.8.12.2.2  (12-06-2013)
Information Letter

  1. An "information letter" is a statement issued by an associate chief counsel office or director that calls attention to a well-established interpretation or principle of tax law (including a tax treaty) without applying it to a specific set of facts.

  2. An information letter may be issued if the taxpayer's inquiry indicates a need for general information or if the taxpayer's request does not meet the requirements of the first revenue procedure issued each year and the Service concludes that general information will help the taxpayer.

  3. An information letter is advisory only and has no binding effect on the Service.

  4. Information letters that are issued by Technical Services are not made available to the public. Information letters do not constitute written determinations as defined in IRC 6110 and are not subject to public inspection under IRC 6110.

  5. Information letters are signed by the Technical Services group manager as delegated by SB/SE Delegation Order 4.18. See http://mysbse.web.irs.gov/RefLibrary/imd/delorders/functional/specialtyprograms/21860.aspx

4.8.8.12.2.3  (12-06-2013)
Letter Ruling

  1. A "letter ruling" , also known as a "private letter ruling" , is a written determination issued to a taxpayer by an associate chief counsel office in response to the taxpayer's written inquiry, filed prior to the filing of returns or reports that are required by the tax laws, about its status for tax purposes or the tax effects of its acts or transactions.

  2. A letter ruling interprets the tax law and applies them to the taxpayer's specific set of facts.

  3. Once issued, a letter ruling may be revoked or modified for a number of reasons, as outlined in the first revenue procedure issued each year.

  4. When completed, the associate chief counsel office will send a copy of the letter ruling, whether favorable or adverse, to the appropriate Service official in the operating division that has examination jurisdiction of the taxpayer's tax return. The copies are generally sent to the assigned reviewer in Technical Services.

  5. Generally, the reviewer will determine if the subject taxpayer is currently under examination and, if so, whether the letter ruling would be pertinent to the examination. If the taxpayer is not currently under examination, the reviewer usually files the letter ruling for possible future reference.

4.8.8.12.3  (12-06-2013)
Technical Coordination Report—Form 3558

  1. Under the Technical Coordination Report Program, tax abuses, inequities, and administrative problems in the interpretation and application of tax laws and regulations are reported to headquarters. It is essential that headquarters be made aware of the scope of tax arrangements that may have the effect of legally circumventing the statute or regulations. Since examiners in the field are often in the best position to identify these situations, the initial steps toward the correction or elimination of the problems frequently originate in the field.

  2. The Technical Coordination Report Program was established as a vehicle for communicating these matters to headquarters. The program is administered by Technical Services, who is responsible for establishing and maintaining an avenue of communication with headquarters on problem areas encountered, through the use of Technical Coordination Reports.

4.8.8.12.3.1  (12-06-2013)
General Information

  1. Technical coordination reports need not be case related. They may result from news items, publications, or other matters encountered in day to day operations. The use of technical coordination reports, both case and non-case related, allows headquarters to utilize the knowledge and experience of field personnel in improving nationwide operating programs.

  2. Technical coordination reports can include one or more of the following subject areas:

    1. Problems or practices that indicate abuses, inequities, or difficulties in applying the administrative provisions of the code and that may be corrected by reexamination of rules for interpretation and application of tax law.

    2. Suggestions for policy statements or interpretative materials on broad subjects if the guidance would assist in eliminating controversy or in promoting national uniformity.

    3. Suggestions for improvements in tax laws, regulations, tax forms and or instructions for tax forms.

  3. Technical coordination reports are classified into two categories:

    1. Those containing significant items which merit the Commissioner's attention, and

    2. Those which do not merit the Commissioner's attention.

4.8.8.12.3.2  (12-06-2013)
Technical Coordination Reports That Merit the Commissioner's Attention

  1. Generally, it should be assumed the Commissioner wants to review matters having one or more of the following characteristics:

    1. A large number of taxpayers are affected.

    2. A large amount of revenue or potential revenue is involved.

    3. The matter relates to a key policy of the President, the Secretary of the Treasury, or the Congress.

    4. The matter is causing or may cause a significant amount of adverse publicity or public controversy.

    5. The matter is creating significant problems in the audit of returns, appeals, or litigation.

  2. While the primary focus is on substantive problems, administrative problems can be submitted under this category if they are of a significant nature. Problems which might be alleviated by amendment of regulations rather than legislative enactment may also be included.

4.8.8.12.3.3  (12-06-2013)
Technical Coordination Reports That Do Not Merit the Commissioner's Attention

  1. The following situations should be reported to headquarters through technical coordination reports:

    1. Tax Abuses: This area covers all cases in which an apparently lawful method or device has been used to escape all or a portion of the tax that would be due. Generally, tax avoidance devices resort to lawful management or manipulation of the form or timing of an income or loss producing transaction to take advantage of some relief provision of the law, or to avoid the tax consequences that would attach to the economic benefits realized.

    2. Inequities: This area involves situations where the application of some particular provision of the law to the particular facts and circumstances results in a substantial disadvantage to a group of taxpayers.

    3. Administrative Problems: This area covers situations where an administrative requirement of the law seems to impose an unnecessary burden on the Service.

4.8.8.12.3.4  (12-06-2013)
Procedures for Technical Coordination Reports

  1. Form 3558, Technical Coordination Report, is used for reporting both items that either warrant or do not warrant the Commissioner's attention. An original and two copies should be generated. This report should be submitted to Chief Counsel for their concurrence. Then it should be routed to the Commissioner through the Territory Manager, Technical Services; Director, Technical Services; Director, Examination; and SB/SE Commissioner.

  2. If the technical coordination report merits the Commissioner's attention, Form 3558 should be clearly marked COMMISSIONER'S ATTENTION at the top of the form.

  3. Reports should be directed to the appropriate office (in headquarters) as listed in Item 1 of Form 3558.

  4. The original and two copies of Form 3558 should be forwarded through channels to Technical Services for review. The assigned reviewer is encouraged to add his or her comments or additional recommendations, even if he/she concurs with the originator. The reviewer must provide comments or an appropriate explanation if he or she does not concur with the originator's recommendation. The package is then processed to headquarters.

  5. The assigned reviewer will maintain a complete copy of Form 3558 and any attachments for reference purposes.

4.8.8.13  (12-06-2013)
Transferee Liability Cases

  1. IRC 6901, Transferred Assets, governs transferee liability. It is procedural only and does not impose liability on a transferee. It provides the mechanism by which the Commissioner can assess and collect the unpaid taxes, penalties, and interest from a transferee or from a fiduciary liable under 31 U.S.C. section 3713 in the same manner and subject to the same provisions and limitations as in the case of the taxes with respect to which the liabilities were incurred. This means a transferee is entitled to an appeals hearing in the same manner in which the transferor would be with regard to the underlying tax (if the underlying tax had not had the benefit of this process) or a transferee liability is subject to deficiency procedures if the underlying transferor's tax was subject to deficiency procedures.

  2. A transferee liability investigation is a joint investigation between collection and examination field employees. While collection officers are experts at locating current assets of the taxpayer or transferee, examination agents are experts at developing the case for the position that a transferee is liable for the transferor taxpayer's liability.

  3. The existence of, or extent of, a transferee's liability is determined by applicable state or federal law. There are two means by which a transferee can become liable for the taxes of a transferor—Transferee at Law and Transferee in Equity. See IRM 4.11.52, Transferee Liability Cases, and IRM 5.17.14, Fraudulent Transfers and Transferee and Other Third Party Liability, for a detailed discussion of the two types of transferee.

  4. Transferee cases come to Technical Services from either examination field groups or from examination PSP. Cases from the field groups may have started as referrals from collection or may be related to cases initiated by examination. Cases from PSP are referrals from collection that do not need examination time (i.e., Collection has obtained an agreement from the transferee). Regardless how cases come to Technical Services, they need to be established on AIMS as DUMMY records.

4.8.8.13.1  (12-06-2013)
Scope of Review

  1. Upon receipt of a transferee case, review the statute of limitations for the transferee case to ensure it was computed correctly. Generally, the transferee statute is one year after the expiration of the period of limitation for assessment against the taxpayer (transferor). Refer to IRC 6901 and IRM 25.6, Statute of Limitations, for more discussion of the transferee's statute.

  2. Prepare Form 895, Notice of Statute Expiration, for each transferee, as applicable, checking the "irregular assessment period" box and indicating the statute was determined by IRC 6901(c). Annotate in the remarks section the transferee’s statute of limitation date and the number of years that were added to the transferor’s statute per IRC 6901(c) to compute the transferee’s statute of limitation.

  3. Under IRC 6902(a), Provisions of Special Application to Transferees, the government has the burden of proving all elements necessary to establish the transferee’s liability. Reviewers must ensure all documentation is contained in the case file to support the government's burden of proof.

  4. There are two types of transferee liability: Transferee at Law and Transferee in Equity. Each requires different elements to support the government’s burden of proof. See IRM 5.17.14.

  5. At a minimum, the case must include the following documents attached to, or referenced in, the Form 3031, Report of Investigation of Transferee Liability, report or equivalent memorandum:

    1. Transferee at Law Cases:
      * Established by contract—a copy of the contract whereby the transferee assumed the tax liability of the transferor.
      * Established by statute—a copy of the applicable state or federal statute.

    2. Transferee in Equity Cases:
      * Transferee in equity is determined when the transfer is considered fraudulent to creditors. The fraudulent transfer can be either constructive fraud or actual fraud.
      * Documentation showing what assets were transferred from the transferor to the transferee, the date the assets were transferred, the value of the assets as of the date of transfer and the amount of consideration paid, if any, by the transferee to the transferor.
      * Documentation showing current legal title. A transferee is rarely a joint entity.
      * Documentation showing the insolvency of the transferor at the date of the transfer or that the transferor was rendered insolvent by the transfer. Examples include a copy of the transferor's balance sheet, documents showing bankruptcy or documents showing dissolution.
      * Documentation of the date the transferor's tax liability accrued.
      * Documentation of the attempts that have been made to collect the tax from the transferor or that collection is not possible or would be futile.
      * If the transferee in equity is based on actual fraud, documentation showing the intent of the transferor to hinder, delay or defeat the payment of tax must also be included.

    3. For All Transferee Cases:
      * Documentation supporting the underlying tax liability of the transferor is required. In addition to the original or copy of the transferor's tax return, the case will include a transcript of the transferor's account if the tax has been assessed or a revenue agent's report (RAR) or statutory notice of deficiency if the tax has not been assessed.

4.8.8.13.1.1  (12-06-2013)
Interest on Transferee Liability Addressed by Examiner

  1. Once it is established that the value of the assets transferred exceeds the transferor's tax liability, plus interest, the courts have generally held the transferee liable for interest in the same manner as the transferor would have been. In a similar situation involving the transferee of a wholly owned corporation, the transferee is liable for interest from the date on which the corporate tax was due. Although the liability of the transferee arises under state law, the amount of the Service's claim should be determined under the Code as long as the value of the transferred assets exceeds the amount necessary to satisfy the transferor liability.

  2. When the value of the net assets transferred is less than the transferor's tax liability, then the transferee's liability for the transferor's interest is not clearly established. The Tax Court stated that when the transferred assets are insufficient to pay the transferor's liability, interest is not allowed on the tax liability itself because transferee liability is limited to the amount transferred. However, interest can be charged against the transferee for the use of the transferred assets, and since this involves the extent of the transferee liability, interest against the transferee is determined by state law.

  3. Under this theory, the United States is in much the same position as a private creditor under state law and the transferee is liable for interest only from the date the transferee is aware of the debtor-creditor relationship. This is most likely the date the transferee received notice and demand for payment from the Service. This appears to be the prevailing view if constructive fraud is proven.

  4. If actual fraud is proven, some states hold the transferee liable for interest from a prior date such as the date of the transfer. Contact area counsel for assistance regarding the applicable state law.

4.8.8.13.2  (12-06-2013)
Agreed Transferee Liability

  1. A transferee case is agreed if the transferee has signed Form 870-T, Waiver of Restrictions on Assessment and Collection of Transferee or Fiduciary Liability and Acceptance of Overassessment (for income tax cases), Form 2504-WC, Agreement to Assessment and Collection of Additional Employment Tax and Acceptance of Overassessment in Worker Classification Cases, / Form 2504, Agreement to Assessment and Collection of Additional Tax and Acceptance of Overassessment (for employment tax) or Form 890-T, Waiver of Restrictions on Assessment and Collection and Acceptance of Overassessment as to Transferee or Fiduciary Liability for Estate, Gift and Generation—Skipping Transfer Tax.

  2. The reviewer will ensure that Form 870-T or Form 890-T contains the amount of the transferor's tax and penalties. In addition, the Form 870-T must contain the appropriate modified language. See IRM 4.8.9.17.5.4, Transferee Waivers on Assessment and Collection.

  3. The reviewer will complete Form 1296, Assessment Against Transferee or Fiduciary. See IRM 4.8.8.13.5, Completing Form 1296, below.

  4. The reviewer will close the case to Centralized Case Processing (CCP) via fax with the following instructions written on Form 3198: "Agreed non-master file transferee assessment. Form 1296 enclosed."

4.8.8.13.3  (12-06-2013)
Unagreed Transferee Liability Case

  1. If the transferee defaults on the 30 day letter or if the transferee statute of limitations is imminent, the examiner will route the transferee case and related transferor case to Technical Services.

  2. Under IRC 6901 statutory notices of transferee liability are only required for transferee cases to the extent such notices would be required prior to assessment of the transferor's liability. Therefore, for certain employment tax cases and for certain excise tax cases, the unagreed liability may be assessed without first issuing a notice. Refer to IRM 4.8.10, Notice of Determination of Worker Classification, to identify those employment tax cases that require a notice of determination of worker classification for the transferor and thus, a notice of transferee liability.

  3. However, the reviewer must still complete Form 1296. See IRM 4.8.8.13.5 below.

4.8.8.13.4  (12-06-2013)
Statutory Notice of Transferee Liability

  1. If the transferee defaults on the 30 day letter or if transferee statute of limitations is imminent, examiners will route the transferee case and related transferor (income tax) case to Technical Services for issuance of the notice of transferee liability. Refer to IRM 4.8.9.17.5 for details concerning notices of transferee liability.

  2. All notices of transferee liability require mandatory review by area counsel per IRM 4.8.9.9.2.1, Mandatory Area Counsel Review.

  3. Each notice of liability will contain the following components:

    1. Letter 902-T, Notice of Liability, including the appropriate opening paragraph as detailed in IRM Exhibit 4.8.9-11, Transferee Letter Opening Paragraphs.

    2. Form 870-T or Form 890-T, Waiver of Restrictions on Assessment and Collection and Acceptance of Overassessment—as to Transferee or Fiduciary Liability for Estate, Gift, and Generation-Skipping Transfer Tax, including the modified language found in IRM 4.8.9.17.5.4.

    3. Transferee Notice of Liability Statement, which includes both a transferor's section and a transferee's section as outlined in IRM 4.8.9.17.5.3, Transferee Statements.

  4. The reviewer will prepare Form 1296, consistent with the position in the notice of liability in anticipation the case will default from 90 day (150 day) suspense.

  5. Once approved by area counsel, the notice of liability will be issued in accordance with regular notice of deficiency procedures as outlined in IRM 4.8.9, Statutory Notices of Deficiency.

  6. If a notice of deficiency is issued to the transferor prior to the completion of the action against the transferee and the notice of deficiency defaults, the transferor return and examination administrative file will be returned to the examination function to be associated with the transferee case file after the transferor tax shown on the notice of deficiency has been assessed. The transferor's AIMS record should be closed to status 90 and the transferor return re-charged to the examination function responsible for the transferee liability case.

  7. If the transferor's notice of deficiency and transferee's notice of liability are issued concurrently and no petitions are filed within the 90 day (150 day) period, both the transferor's and the transferee's case files will be sent to CCP for assessment.

  8. If a transferor case is before the Tax Court and the transferee fails to file a petition for the notice of liability within the 90 day (150 day) period, the transferee file will be sent to CCP for assessment. The appeals office controlling the transferor's case will be notified of any payments made by the transferee.

  9. No statutory notice of transferee liability will be issued for some excise taxes or some employment taxes. IRC 6901 states the transferee liability will be assessed, paid, and collected in the same manner as the taxes to which the transferee liability is incurred. If no notice of deficiency is issued to a taxpayer for employment and excise taxes, no notice of liability will be issued to a transferee of employment taxes or excise taxes. See IRM 4.8.10, Notice of Determination of Worker Classification, to identify those employment tax cases that would require a notice of determination of worker classification for the transferor and thus, a notice of transferee liability for the transferee.

4.8.8.13.5  (12-06-2013)
Completing Form 1296

  1. Form 1296 is the assessment document used by the non-master file unit to make the transferee liability assessment on non-master file. The form must clearly communicate all aspects of the transferee liability to CCP and to the non-master file unit, including limitations on the transferee's liability, other transferees and the interest computation date for the interest against the transferee.

  2. A separate Form 1296 is prepared for each transferee for each kind of tax for each taxable period of the transferor.

  3. In limited liability situations (i.e., when the value of the net assets received by the transferee is less than the unpaid liability of the transferor) and more than one tax period is involved, the transferee's liability should not be allocated to the various tax periods. Instead, the liability should be shown as one amount on Form 1296 for the earliest tax period of the transferor, without identifying it with any particular year of the transferee.

  4. In limited liability situations, the Form 1296 should also include instructions for computation of interest, including the interest start date and the interest rate.

  5. See Exhibit 4.8.8-5, Sample Forms 1296 for Transferee Assessment, for examples of completed Form 1296.

4.8.8.14  (12-06-2013)
Mitigation Cases–IRC Sections 1311-1314

  1. In general, IRC 1311, Correction of Error, through IRC 1314, Amount and Method of Adjustment, authorize correction of errors in years that otherwise are barred by the statute of limitations. These mitigation provisions apply only in seven specific circumstances described in IRC 1312, Circumstances of Adjustment. When an adjustment results in an increase in tax, an assessment can be made within one year from the date a determination has been made.

  2. Generally, the mitigation provisions are intended to offset the benefit a party might otherwise obtain by maintaining a position in an open tax year that is inconsistent with the treatment of the same item in a closed year (e.g. a taxpayer receives a double deduction). The statutory rules however, are detailed and do not reach all such benefits. Each case in which it appears mitigation may apply will require careful research and possible area counsel involvement.

  3. The mitigation rules do not apply to employment tax. See IRC 1314(e). However, IRC 6521, Mitigation of Effect of Limitation in Case of Related Taxes Under Different Chapters, provides a special mitigation rule with respect to the tax on self-employment income (SECA) and the tax under the Federal Insurance Contributions Act (FICA). It authorizes an offsetting adjustment if the following is present:

    1. An amount is erroneously treated as self-employment income instead of wages and the correction of the error would require an assessment of FICA tax and a credit or refund of SECA tax, or

    2. An amount is erroneously treated as wages instead of self-employment income and the correction of the error would require an assessment of SECA tax and a credit or refund of FICA tax, and

    3. The period of limitations for one of the taxes to be corrected is open, but the correction of the other tax is prevented by law or a rule of law (other than IRC 7122 relating to compromises).

  4. Reviewer responsibilities include the following:

    1. Determine whether or not the mitigation provisions apply to the situation.

    2. Determine whether or not Form 2259, Agreement as Determination Pursuant to Section 1313(a)(4) of the Internal Revenue Code, and the statement page have been completed properly.

    3. Execute Form 2259 on behalf of the government in accordance with SB/SE Delegation Order 4.5 (subject to revision), see http://mysbse.web.irs.gov/RefLibrary/imd/delorders/functional/examination/21823.aspx.

    4. Distribute Form 2259 and statement page:
      * Original and/or executed copies associated with the appropriate tax return of each taxpayer involved.
      * Copy of executed Form 2259 furnished to taxpayer.

  5. See IRM 4.8.8.3, Closing Agreements, if a closing agreement is associated.

4.8.8.15  (12-06-2013)
Imprest Fund Audits

  1. References available for review:

    • IRM 9.11.1, Fiscal and Personnel Matters Handbook—Fiscal and Budgetary Matters.

    • Memorandum of Understanding Between Chief, Criminal Investigation and Commissioner, Small Business/Self-Employed Division dated July 27, 2011, entitled Quarterly Imprest Fund Audits.

  2. Historically, the examination function conducted audits of various imprest funds within the Service. Over the years, these funds have been centralized and have been subjected to a greater degree of control. This occurred as it became less necessary to make purchases using cash. Criminal Investigation (CI) still maintains an investigative imprest fund for confidential expenditures.

  3. The imprest fund maintained by CI is a bank account used to fund investigative expenditures and pay confidential informants, but is not used for the procurement of equipment. There is a cashier and an alternate cashier assigned to maintain the fund. The cashiers are individuals who do not perform investigations for which they would be authorized reimbursement or payment from the fund. The cashier can not be anyone authorized to grant approval for investigative expenditures. See IRM 9.11.1.4.5.5, Guidelines for the Investigative Imprest Fund Cashier.

  4. Special Agents may either receive advances from the fund by submitting Form 8562, Request/Receipt For Advances From Investigative Imprest Fund/Or Non-Recoverable Funds, or submit claims for reimbursement by using Form 10411, Reimbursement Claim for Confidential Expenditures on Official Business. Advances for investigative expenditures must be approved in advance. Definitions of these expenses are included in IRM 9.11.1.4, Confidential Investigative Expenditures (Pre-Authorized).

  5. Because many of the expenditures are confidential in nature, not all of the information required to be submitted to get an advance or a reimbursement is available to the individuals auditing the imprest fund.

4.8.8.15.1  (12-06-2013)
Memorandum of Understanding Between CI and SB/SE

  1. In a memorandum of understanding (MOU) between CI and Small Business/Self-Employed (SB/SE) dated July 27, 2011, SB/SE agreed to the following:

    • Two SB/SE employees with an auditing background will conduct the audit of the CI Imprest Fund.

    • No two auditors will conduct consecutive audits. The audit team can consist of three individuals - A and B can perform the first audit, A and C can perform the second audit, C and B can perform the third audit, etc.

    • Effective in the first quarter of FY 12, Examination will become responsible for all quarterly CI Imprest Fund audits.

      Note:

      In locations where Technical Services has personnel, the audits will be conducted in alternating quarters by Technical Services and Field Examination. In locations where Technical Services does not have personnel, the Field will conduct the audits in all four quarters.

  2. Based on the MOU, the audits of the CI imprest fund are:

    • Conducted on a quarterly basis, and each audit is to be completed before the end of the quarter.

    • Conducted at the CI imprest fund cashier's office.

    • Conducted at irregular intervals and without prior notice to CI.

4.8.8.15.2  (12-06-2013)
Forms

  1. The CI imprest fund cashier will provide the auditors with the following items:

    1. Form 1149, Statement of Designated Depository Account, and the bank statements for the quarter being audited.

    2. Form 1129, Cash Reimbursement Voucher and/or Accountability Report, with attached Form 10411, Reimbursement Claim for Confidential Expenditures on Official Business, for the quarter being audited.

    3. Imprest fund checking account documentation, including the check register, uncashed checks, deposits in transit and unreimbursed subvouchers.

    4. Form 2844, Reconciliation of Imprest Fund, for the quarter.

    5. The latest Optional Form 211, Request for Change or Establishment of Imprest Fund.

    Note:

    No original receipts or copies of receipts for the expenditures will be provided, due to the confidential nature of the expenditures involved.

4.8.8.15.3  (12-06-2013)
Quarterly Audit

  1. The MOU provides that the quarterly audit of the imprest fund include the following steps and be accomplished by the two assigned auditors:

    1. Review optional Form 211 for changes in the following:

      * Cashier's name or location
      * Designation or revocation of cashier
      * Fund amount increases or decreases
      * Checking accounts (new account, transfer to different bank, or closure of account)

      Note:

      No recommendation is to be made by the auditors regarding a change in fund levels.

    2. Review Form 1149.

    3. Reconcile the imprest fund balance with the bank statements, the outstanding advances, and Form 1129 using Exhibit 4.8.8-6, Imprest Audit Worksheet, and Exhibit 4.8.8-7, Imprest Audit Checklist.

    4. Prepare Form 2844.

    5. Sign and print their names on Form 2844.

    6. Provide a copy of Form 2844 to the SAC.

    7. Mail the original Form 2844, the cover memo in Exhibit 4.8.8-8, Exhibit 4.8.8-6 and Exhibit 4.8.8-7 to:

      Imprest Fund Technician
      Internal Revenue Service
      Beckley Finance Center
      P.O. Box 9002
      Beckley, WV 25802-9002

4.8.8.15.4  (12-06-2013)
Reconciling the Funds

  1. If the auditors cannot reconcile the fund to the bank balance due to a bank error, the cashier will determine the cause of the error, correct it, and complete a new Form 2844, including an explanation and the resolution. The auditors will then complete the review.

  2. If the auditors cannot reconcile the fund to the bank balance due to a computer or program error, the CI cashier will attempt to resolve the problem. The cashier may have to work with the National Operations Center (NOC) to attempt to resolve a computer error. When the problem is resolved, the cashier will provide a new Form 2844, including an explanation of the nature of the problem and the resolution to the auditors. The auditors will then complete the review.

  3. If the account does not reconcile, and the problem cannot be resolved, the auditors will not sign Form 2844. The auditors will notify the SAC of the problem. The cashier is charged with resolving the problem.

4.8.8.16  (12-06-2013)
Abusive Transactions (AT)

  1. An abusive transaction (AT) is any plan, arrangement, or transaction designed, sold, or promoted by an individual promoter, or return preparer, for the purpose of circumventing tax laws or evading tax obligations and offered to a person or entity with U.S. tax obligations to obtain tax benefits not allowable by law. There are two types of AT cases:

    • Promoter

    • Participant

  2. The majority of the case reviews by Technical Services are for participant cases. More information on AT can be found in IRM 4.32, Abusive Transactions (AT).

4.8.8.16.1  (12-06-2013)
Identifying AT Cases

  1. There are numerous schemes that fall under AT. The following lists only a portion of those schemes.

    • Abusive Flow-Through Schemes:

      * Abusive Trust, Domestic and Foreign
      * Charitable Trusts
      * Family Limited Partnership

    • Business and Deduction Schemes:

      * Home Based Business

    • Corporate Tax Shelter Schemes:

      * 401k Accelerator
      * CARDS
      * Son of Boss

    • Exempt Organization Schemes:

      * Zero Tax and Exempt W-4
      * IRS 861 and Employer Abatement

    • Offshore Schemes:

      * Offshore Employee Leasing

    • Refund and Tax Credit Schemes:

      * ADA Credit
      * Slave Reparation Claims

  2. Cases identified as AT may become part of a project. National project codes are assigned to identify the key examination cases and their related parties to specific projects. A national four-digit tracking code links a participant/investor to a specific promotion. Project and tracking codes can be located at the My SBSE, Abusive Transactions and Technical Issues and on the AIMS website to assist in identifying the AT scheme.

4.8.8.16.2  (12-06-2013)
Technical Services Case Reviews and Procedures

  1. Case reviews and procedures will vary depending on the type of AT scheme. Refer to the AT website.

  2. In general, reports for AT participant cases are prepared like regular cases. With the exception for trusts and FLPs (Family Limited Partnerships), RGS is used to generate reports. For trust cases, the reports are done manually with worksheets available on the AT website. For FLP cases, Estate and Gift Notebook will generate the reports.

  3. A full range of penalties may apply to AT cases. See IRM 20.1.5, Penalty Handbook, Return Related Penalties.

  4. In addition to a valid protest (as defined in Pub 5, Your Appeal Rights and How To Prepare a Protest If You Don’t Agree) for unagreed cases going to Appeals, the examiner's transmittal letter should clearly state the name of the promotion and whether the agent is aware of any national settlement initiatives. [Estate and Gift FLP cases do not utilize a transmittal letter.] For unagreed cases not going to Appeals, the case may be subject to a mandatory review by area counsel prior to the issuance of the statutory notice of deficiency. Refer to IRM 4.8.9.9.2.1.

  5. For agreed cases, the reviewer may need to perform additional procedures before closing the case. Depending on the AT scheme involved, forms, such as Form 906, Closing Agreement on Final Determination Covering Specific Matters, and Form 5346, may be in the case file, which will require additional procedures by the reviewer. Specific AT schemes should be researched on the AT website for applicable procedures.

4.8.8.16.3  (12-06-2013)
Resources for AT Cases

  1. Within Technical Services, the group alternative resolution implementation (ARI) has a technical advisor which oversees most abusive transactions and who can provide support and guidance to all reviewers as well as Exam field agents. See IRM 4.8.1.2.2, Alternative Resolution Implementation (ARI).

  2. Information and procedures for specific AT schemes are located at the AT website at http://mysbse.web.irs.gov/AboutSBSE/Exam/at/emerging/18339.aspx. At this website, there is other useful information, including technique guides, resource guides, training material, and procedures for related programs.

  3. Issue management teams (IMT) have the responsibility to develop the strategic approach to work a particular AT issue. The IMT is the main contact for a particular issue. Its members are responsible for coordinating all issue actions and activities with other operating divisions and other divisions within SB/SE. The IMT monitors all inventories throughout the life of the issue. The IMTs are located on the AT website.

  4. A Technical Advisor (TA) is assigned to every IMT. The TA is generally the first point of contact for revenue agents and other field compliance personnel with questions about a particular AT arrangement. The TA assists the IMT to identify concerns with issue development and or case development including comments that relate to appropriate penalty development. The TA will post to the web pages technical positions, audit aids, resource guides, and media materials related to specific AT arrangements. The TA assigned to the IMT can also be contacted to see if there is more current information than what is posted on the website. Technical advisors are listed under the IMTs, located on the AT website.

4.8.8.16.4  (12-06-2013)
Initiatives

  1. Ongoing—None at this time.

  2. Expired:

    1. Last Chance Compliance Initiative (LCCI)—This Initiative was to identify and pursue taxpayers who used offshore financial arrangements to improperly avoid tax. The LCCI provided eligible taxpayers with a chance to correct their tax liability at the examination level with the added benefit of the Service considering lesser penalties. This Initiative expired on March 23, 2009 and is no longer offered to taxpayers.

    2. The Global Settlement Initiative (GSI), under Announcement 2005-80 Settlement Initiative, was an initiative that provided a one-time opportunity for taxpayers to voluntarily come forward and resolve their civil tax disputes over 16 listed transactions and 5 other abusive transactions. This initiative expired on January 23, 2006 and is no longer offered to taxpayers.

4.8.8.17  (12-06-2013)
Appeals/Counsel Liaison

  1. The Appeals/Counsel liaison is responsible for the following:

    1. Receiving cases returned to Examination from Appeals and

    2. Assisting with and coordinating requests from Examination to area counsel for technical advice.

4.8.8.17.1  (12-06-2013)
Cases Returned From Appeals

  1. When a case is returned to Technical Services from Appeals, the reviewer must determine whether he or she agrees with the appeals officer's recommendations based upon a factual and technical review of the issues raised by Appeals.

  2. Refer to IRM 4.8.5.4, Post Examination Case Processing Requirements, Cases Returned from Appeals, for a complete discussion of procedures for cases returned by Appeals.

    Note:

    When discussing cases with appeals officers, keep in mind the provisions of Rev. Proc. 2012-18, 26 CFR 601.106, regarding the prohibition on "ex parte" communications between Appeals officers and other IRS employees.

4.8.8.17.2  (12-06-2013)
Feedback From Appeals

  1. All feedback from Appeals (Form 5402, Memoranda or Appeals Supporting Statements) is forwarded by Appeals directly to each field area director for appropriate review and dissemination.

4.8.8.17.3  (12-06-2013)
Advice From Area Counsel

  1. On occasion, a revenue agent will prepare a memorandum requesting technical assistance from area counsel. Advice can be requested on a variety of issues, such as the following:

    • Preparation of a Form 872, Consent to Extend the Time to Assess Tax, statute extension

    • Interpretation of a specific Internal Revenue Code section

    • Effect of contract(s) to specific issues

  2. Procedures for processing requests for area counsel advice are contained in IRM 4.8.8.12.1.2, Formal and Informal Technical Assistance, Advice From Area Counsel, above.

4.8.8.18  (12-06-2013)
Third Party Contacts

  1. The purpose of this section is to provide Technical Services staff with the basic procedures to conduct reviews to determine whether Examination employees observed the advance general notice requirements of IRC 7602, Examination of Books and Witnesses.

  2. References for third party contact are as follows:

    1. IRC 7602(c)

    2. Treas. Regs. 301.7602-2 (Effective 12/18/2002)

    3. IRM 4.11.57, Third Party Contacts

    4. IRM 4.10.1.6.12, Third Party Contacts—Background

    5. Third Party Contact Coordinators (includes Examination coordinators)

4.8.8.18.1  (12-06-2013)
Prior Notification Requirements

  1. IRC 7602(c)(1) states, "An officer or employee of the Internal Revenue Service may not contact any person other than the taxpayer with respect to the determination or collection of the tax liability of such taxpayer without providing reasonable notice in advance to the taxpayer that contacts with persons other than the taxpayer may be made."

  2. Previously, the advance general notice of potential third-party contact was usually accomplished by issuance of one of several versions of Letter 3164, Third Party Notice. Pub 1, Your Rights as a Taxpayer, contains the advance general notice of potential third-party contact that is required by IRC 7602. It is consistent with the amendment of IRC 7602, as the Conference Committee Report (H.R. Conf. Rep. 105-599) for that section specifies, "It is intended that in general this notice will be provided as part of an existing IRS notice provided to taxpayers."

  3. Pub 1 containing the advance general notice of third-party contact is to be provided (by regular mail or personal delivery) to the taxpayer at the time of initial contact and before any third-party contact is made.

4.8.8.18.2  (12-06-2013)
New Notification Procedures

  1. The issuance of the various versions of Letter 3164 or the securing of authorization from the taxpayer to make a third-party contact is no longer required in order to accomplish our obligation to provide the taxpayer with advance general notice of third-party contact prior to making the third-party contact. Rather, Pub 1 will serve to satisfy the advance general notice requirement.

  2. The Pub 1 will serve to satisfy the advance general notice requirement for all tax periods included in the concurrent examination cycle (case) for the same taxpayer. Other taxpayers who are included in the case will need to be provided with a separate Pub 1. Any tax periods for the same taxpayer that are subsequently examined as part of a subsequent cycle (case) will require the publication be issued again to accomplish the advance general notice requirement.

  3. Letter 3164-N, Third Party Contact to Preparers, and Letter 3164-P (DO), Third Party Notification for IRC 6700/6701 investigations, should still be issued for return preparer penalty investigations and promoter investigations, respectively, according to existing procedures.

4.8.8.18.3  (12-06-2013)
Basic Reviewer Responsibilities

  1. The reviewer will review Form 9984, Examining Officer's Activity Record, to ensure the examiner documented the case activity record with the requirements of IRC 7602(c).

  2. For third-party contacts made for the purpose of collecting or determining a tax liability, IRC 7602(c) requires the Service to complete the following:

    1. Provide advance notice to the taxpayer that third-party contacts may be made,

    2. Record each third-party contact made, and

    3. Provide a list of third-party contacts to the taxpayer upon request.

  3. The reviewer will review Form 9984 to ensure that the examiner documented whether the exceptions to the notice requirements of IRC 7602(c) applied, or whether the contacts were not considered third-party contacts under IRC 7602(c) pursuant to Treas. Reg. 301.7602-2.

4.8.8.18.4  (12-06-2013)
Advance Notification to the Taxpayer

  1. The reviewer will review Form 9984 to ensure that the examiner has documented the following:

    1. The taxpayer was the primary source of information with respect to the taxpayer's return and attempts were made to obtain (or verify), to the greatest extent practicable, the required information from the taxpayer before seeking to obtain the information from third parties. Per IRM 4.10.3.2.1.4(2), Third Party Interviews, information will be collected, to the greatest extent practicable, directly from the taxpayer.

    2. The specific requests that were made to the taxpayer (generally, copies of information document requests (IDRs)) to obtain or verify the relevant information. The reviewer should also ensure that the case file considered as a whole supports the decision to obtain or verify the relevant information via a third-party contact. While a separate specific notice is not required, there is nothing intended in the procedures to preclude the examiner from notifying the taxpayer (orally or in writing) that a third-party contact is about to be made if, in the examiner's judgement, such notice will likely result in the taxpayer providing the relevant information.

    3. The date Pub 1 was mailed and or personally delivered to the taxpayer. It is extremely important that the examiner document the fact that Pub 1 has been provided to the taxpayer in advance of any third-party contact so that the Service can demonstrate compliance with IRC 7602(c)(1).

    4. If the initial contact with the taxpayer was by mail, document the date Pub 1 and the initial contact letter were mailed. Document the date as specified in IRM 4.10.2.7.4.2, Contacting the Taxpayer by Letter. Document the third-party contact was not made before the passage of ten calendar days, in order to provide a reasonable period of time for the taxpayer to receive general notice via Pub 1.

    5. If the initial contact with the taxpayer was made by telephone, document the date Pub 1 and the examination appointment confirmation letter were mailed to the taxpayer, per IRM 4.10.2.7.4.1, Contacting the Taxpayer by Telephone.

    6. If the initial contact with the taxpayer was in person, document the date and time the examiner made initial contact with the taxpayer and personally delivered Pub 1.

    7. Compliance with the separate notice requirements of IRM 4.10.1.6.8.1, Applicability to Examination Notices, for joint return situations. Pub 1 must be issued separately to each spouse.

    8. The authorized representative, if any, was provided with a copy of Pub 1 and any other correspondence in accord with the Service procedure of providing copies of correspondence to the taxpayer's representative (unless the taxpayer has indicated otherwise).

    9. Pub 1 was issued to the taxpayer to fulfill the advance general notice requirement for all tax periods included in the concurrent examination cycle (case) of the taxpayer.

    10. Pub 1 was separately provided to each taxpayer involved in a case, and the examiner reissued Pub 1 to the taxpayer for any subsequent tax periods that are not part of the concurrent cycle (case).

4.8.8.18.5  (12-06-2013)
Record Each Third Party Contact Made

  1. The reviewer will review Form 9984 to ensure the examiner completed the following:

    1. Documented third-party contacts on Form 12175, Third Party Contact Report Form, or Form 12180, Third Party Contact Authorization Form,

    2. Included copies of the forms in the case file, and

    3. Forwarded Form 12175 to the Third Party Contact Coordinator.

4.8.8.18.6  (12-06-2013)
Provide a List of Third Party Contacts to the Taxpayer Upon Request

  1. The reviewer will review Form 9984 to ensure that the examiner documented any requests from the taxpayer for a list of all third parties contacted, and the examiner contacted the third-party contact coordinator who is responsible for providing the list to the taxpayer with Letter 3173, Third Party Contacts.

4.8.8.18.7  (12-06-2013)
Exceptions or Contacts Not Considered Third Party Contacts

  1. The reviewer will review Form 9984 to ensure the examiner documented whether the exceptions to the notice requirements of IRC 7602(c) applied, or whether the contacts were not considered third-party contacts under IRC 7602(c). The reviewer must ensure the examiner documented whether the exceptions to the notice requirements of IRC 7602(c) applied. Treas. Regs. 301.7602-2(f) provides for seven exceptions to the notice requirements under IRC 7602(c). The reviewer must ensure the examiner documented whether contacts were not considered third-party contacts under IRC 7602(c). Treas. Regs. 301.7602-2 provides examples of which contacts are not considered third-party contacts under IRC 7602(c).

4.8.8.19  (12-06-2013)
Report of Foreign Bank and Financial Accounts (FBAR) Coordination

  1. The Report of Foreign Bank and Financial Accounts, TD F 90–22.1, (FBAR), is required when a U.S. person has a financial interest in or signature authority over one or more foreign financial accounts with an aggregate value greater than $10,000. If a report is required, certain records must also be kept. See LB&I FBAR website at http://lmsb.irs.gov/hq/pqa/Post-filing/pfa_FBAR_Home.asp.

  2. In May 2003, the Service was delegated civil enforcement authority for the FBAR.

  3. Technical Services does not provide direct processing support of FBAR cases. Instead, Technical Services provides technical assistance when needed, answering questions from the field and referring examiners to the assigned local area counsel when additional technical support is needed.

  4. The following resources/references are available:

    1. FBAR web page at http://lmsb.irs.gov/hq/pqa/Post-filing/pfa_FBAR_Home.asp,

    2. IRM 4.26.16, Report of Foreign Bank and Financial Accounts (FBAR), which contains FBAR law,

    3. IRM 4.26.17, Report of Foreign Bank and Financial Accounts (FBAR) Procedures, which contains FBAR procedures,

    4. Listing of assigned area counsel attorneys on the Chief Counsel web site at http://lmsb.irs.gov/hq/pqa/downloads_FBAR/LMSB_Division_Counsel_FBAR_Coordinators.asp,

    5. LB&I FBAR home page at http://lmsb.irs.gov/hq/pqa/Post-filing/pfa_FBAR_Home.asp,

    6. Link to Bank Secrecy Act at http://mysbse.web.irs.gov/aboutsbse/frdbsa/default.aspx.

4.8.8.20  (12-06-2013)
Qualified Offers

  1. IRC 7430, Awarding of Costs and Certain Fees, provides that a taxpayer shall be treated as the prevailing party if the taxpayer submits a qualified offer and the taxpayer's liability under the final court judgement is equal to or less than the liability of the taxpayer had the government accepted the qualified offer. The qualified offer rule permits the award of administrative or litigation costs under IRC 7430 even where the Service's position was substantially justified, so long as the other requirements of the section are met.

  2. The term "qualified offer" means a written offer which contains the following:

    1. States it is a qualified offer for purposes of IRC 7430;

    2. Is made by the taxpayer to the United States between the date the taxpayer is first notified of the right to administrative review (when the 30 day letter is issued or, if not is issued, when the 90 day letter is issued) and the date which is 30 days before the date the case is first set for trial;

    3. Specifies the offered amount of the taxpayer's liability with respect to all adjustments at issue at the time the offer was made; and

    4. Remains open until the earliest of the date the offer is rejected, the date the trial begins, or the 90th day after the date the offer is made.

  3. The taxpayer must deliver the offer to the office or personnel within the Service, Office of Appeals, Office of Chief Counsel or Department of Justice that has jurisdiction over the tax matter in the administrative or court proceeding. See Treas. Reg. 301.7430-7(c)(2).

  4. Timely identification of a qualified offer is extremely important. A qualified offer may be sent by the taxpayer and associated with the case, or may be contained in the case file when the case is received in Technical Services.

  5. If a qualified offer is identified, the Technical Services employee will immediately fax the qualified offer to Chief, Branch 5, Chief Counsel; Procedure and Administration, requesting a determination of whether the offer is a qualified offer under IRC 7430. Along with the offer document, include a copy of the 30 day letter or the 90 day letter and a copy of the court petition (if applicable). The subject line of the fax cover sheet should be "Is This a Qualified Offer?"

  6. If Counsel determines that the offer is a qualified offer, Appeals has the discretion as to whether to accept or reject the offer, and the offer should be forwarded immediately to Appeals along with the memorandum in Exhibit 4.8.8-9, Qualified Offer Memo. If the offer was submitted within the previous 90 days, immediately send an E-mail to the Office of Appeals, Tax Policy and Procedure Exam, Technical Services, to alert Appeals of the open IRC 7430 qualified offer, and attach an expedite tag to the top of the case file.

4.8.8.21  (12-06-2013)
Subject Matter Experts

  1. One of the benefits of the current Technical Services management structure is it allows for uniformity and consistency nationwide in working all of the Technical Services programs. Certain subject matter experts (SMEs) are designated for assigned core Technical Services programs. The goal of the SME position is to facilitate and ensure uniformity and consistency of each program area within Technical Services and to provide expert advice in the program subject matter.

  2. Reviewers and managers in Technical Services rely on the SMEs' expertise in their respective program areas. The SME is a focal point for discussing emerging issues, surfacing issues, concerns and trends observed in field cases, and recommending legislative tax law and procedural changes through management.

  3. The SMEs serve as a reference point for other Technical Services program coordinators and employees on their respective subject matter, and interact with their Chief Counsel, Examination Policy and other operating division's counterparts in working issues within their program areas of expertise.

  4. The SME assignment is a collateral duty and should not take more than 20 percent of a SME's total time.

4.8.8.21.1  (12-06-2013)
Communication

  1. The SME serves as a focal point to coordinate and disseminate information to other Technical Services employees on the assigned subject matter.

  2. The SME will conduct periodic meetings with local coordinators assigned to the subject matter. The meetings should consist of informational conference calls with the local coordinators regarding issues, procedures, trends and concerns. Participation of the local coordinators in the dialogue should be encouraged. Examples of items to address in the calls include proposed and or new IRM procedures, information found during research of tax services, internal documents and websites, and achieving program consistency.

  3. Each SME's territory manager will be the champion/lead for the SME's program. The SME will work in coordination with his or her group manager to work and elevate issues to the territory manager and in interpreting procedures and guidelines.

  4. At a minimum, the SME will provide two briefing/narrative assessments of his or her program area to the Director of Technical Services and Chief Operations, through his or her territory manager and immediate group manager. The first assessment should be submitted by June 1 and the second assessment by November 1 of each year. The narrative should address the state of the program/subject matter including new issues, trends, communications, problem areas, concerns of coordinators, outreach needs, as well as improvements achieved through program consistency.

  5. The SME advises management on national standardization of Technical Services work practices.

  6. The SME works with Technical Services Operations to develop and maintain the currency of his or her SharePoint page so it provides tools for reviewers to use in working cases in his or her program area.

  7. The SME assists in miscellaneous Technical Services initiatives and developing presentations, training and education for field examiners.

  8. The SME submits articles on the assigned subject matter to the Technical Digest for publication.

4.8.8.21.2  (12-06-2013)
Research and Identify/Elevate Issues

  1. The SME will periodically conduct research on the subject matter using electronic tax law research tools provided by the Service, interim guidance and other internal documents, and internal websites. Visit http://rnet.web.irs.gov/index1.htm for access to various research resources.

  2. The SME will elevate issues, concerns, casework trends, emerging issues, proposed legislative tax law changes, and procedural changes through the management chain and coordinate subsequent actions with assigned Technical Services Operations staff, Examination Policy Analysts and Chief Counsel.

4.8.8.21.3  (12-06-2013)
Periodic Review

  1. The SME will review IRM sections that relate to his or her subject matter at least annually. He or she will draft revisions and forward recommended changes to the territory manager through his or her immediate manager. The recommended revisions should be shared with the local Technical Services coordinators, and informally with Examination Policy and Chief Counsel counterparts (if necessary) prior to forwarding to the territory manager.

  2. The SME will review Delegation Orders annually and recommend changes through the management chain and Technical Services Operations staff and assist in drafting the revisions, as necessary.

  3. The SME will review forms, letters, documents, and systems for the assigned subject matter and recommend changes and updates to management and Technical Services Operations.

  4. The SME will review and update Technical Services training material products on the assigned subject matter as requested.

4.8.8.21.4  (12-06-2013)
Coordination

  1. The SME will recommend changes to other operating division products through Technical Services management on his or her assigned subject matter. See IRM 1.11.2.1.1, Requesting Changes to an IRM Section, regarding mediums to submit IRM changes.

  2. The SME will perform a review of formal requests from other operating divisions on their documents and provide feedback through Operations.

  3. The SME will take a leadership role in the design and development of Technical Services course material and CPE modules. Additionally, the SME will take a leadership role in instructing CPE sessions on his or her assigned subject matter as requested.

4.8.8.22  (12-06-2013)
Rev. Proc. 92-29, Alternative Cost Method for Real Estate Developers

  1. Developers of real estate frequently undertake projects in which a residential or commercial development will not be completed and all homes or lots not sold until more than one year after initiation. If certain community-wide amenities are included in the price of the individual units, such as athletic centers, meeting rooms, hiking and biking trails, etc., the early sales may take place before all expenses of the amenities have been incurred.

  2. The general economic performance rule under IRC 461, General Rule for Taxable Year of Deduction, prevents including these expenses on the developer’s return at the time of the early sales. To remedy this situation, the Service issued Rev. Proc. 92-29, 1992-1 CB 748 as a means for the taxpayer to estimate the total cost of the future improvements to be made and allocate these costs to the individual lots or units.

  3. Under the alternative cost method provided by Rev. Proc. 92-29, a developer may include in the basis of properties sold the allocable share of the estimated costs of common improvements without regard to whether the costs have been incurred under IRC 461(h).

  4. Under the "alternative cost limitation" provided by Rev. Proc. 92-29, the total amount of common improvement costs that can be included in the basis of the properties sold for the year may not exceed the amount of common improvement costs actually incurred under IRC 461(h).

  5. If the alternative cost limitation prevents a developer from including the entire allocable share of the estimated cost of common improvements in the basis of the properties sold for one year, the costs not included may be taken into account in a subsequent taxable year(s) to the extent additional common improvement costs have been incurred under IRC 461(h).

4.8.8.22.1  (12-06-2013)
The Rev. Proc 92-29 Process

  1. To use the alternative cost method provided in Rev. Proc. 92-29, the original request must be filed on or before the due date of the developer’s original federal income tax return (determined with regard to extensions to file) for the taxable year in which the first benefitted property in the project is sold. See IRM 4.10.13.8, Real Estate Developers: Alternative Treatment of Common Improvements Under Rev. Proc. 92-29, for a discussion of where the original request should be filed. A copy of the initial request is attached to the developer’s original tax return. There is no prescribed form for the election. However, certain information must be included in accordance with the revenue procedure.

  2. Developer-taxpayers who make this election must extend the statute of limitations when needed. See IRM 4.8.8.22.2.4.

  3. An annual statement is required to be filed for every year of the project. See IRM 4.10.13.8 for a discussion of where the original annual statement should be filed. A copy of the annual statement is attached to the developer’s original tax return. There is no prescribed form for the annual statement. However, certain information must be included in accordance with the revenue procedure.

  4. A supplemental request is required to extend the common improvement construction period past the original estimated completion date. See IRM 4.10.13.8 for a discussion of where the original supplemental request should be filed. There is no prescribed form for the supplemental request. However, certain information must be included in accordance with the revenue procedure.

4.8.8.22.2  (12-06-2013)
Rev. Proc. 92-29 Coordinator’s Responsibilities

  1. Program responsibility for the Rev. Proc. 92-29 program may be assigned to a Technical Services revenue agent reviewer or the Technical Services technical coordinator, depending on staffing and program volume. The program coordinator should read Rev. Proc. 92-29 in order to be familiar with its contents. Additionally, the program coordinator should periodically check for new revenue rulings, revenue procedures, letter rulings, IRMs, and any information which may be posted on the Technical Services SharePoint site.

  2. The Rev. Proc. 92-29 coordinator’s responsibilities include, but are not limited to the following:

    1. Reviewing initial requests, annual statements, and supplemental requests to ensure all required information is provided,

    2. Determining if the project complies with the revenue procedure requirements for using the alternative cost method,

    3. Verifying the correctness of the inventory cost allocations,

    4. Securing a statute extension for all project years, if necessary,

    5. Issuing approval or denial letters when necessary, and

    6. Providing technical assistance to field examiners.

  3. The authority to sign letters relating to taxpayer requests under Rev. Proc. 92-29, or its equivalent, is delegated to revenue agent reviewers in Technical Services under SB/SE Delegation Order 4.44, effective 10/1/2000. See http://mysbse.web.irs.gov/RefLibrary/imd/delorders/functional/examination/21575.aspx.

4.8.8.22.2.1  (12-06-2013)
Rev. Proc. 92-29 Initial Request

  1. The review of a Rev. Proc. 92-29 initial request involves an administrative analysis of the real estate project to determine if the project qualifies for Rev. Proc. 92-29 treatment, a financial analysis of the accuracy of the common improvement cost components and the per unit expense allocations the taxpayer intends to claim in future years against sales income, and a determination of the need for a statute extension and the periods to be protected.

  2. Past experience with a particular developer and or preparer should be considered in determining the scope of review for each initial request.

  3. The coordinator should set up a project file folder for each request, which at a minimum will include the initial request, a Rev. Proc. 92-29 Initial Request Check Sheet, see Exhibit 4.8.8-10, a Rev. Proc. 92-29 Project Status Sheet, Exhibit 4.8.8-11, IDRS prints, the initial request approval letter, and the coordinator’s case activity record.

  4. Workpapers may be prepared to track the status of the project. Rev Proc. 92-29 sample computation spreadsheets may be found on the Technical Services SharePoint site at https://organization.ds.irsnet.gov/sites/dcse/sbse/exam/ts/SitePages/Home.aspx.

  5. Only one ERCS collateral control will be established for each real estate development project. The year of the request will be used as the tax year. If the taxpayer files more than one initial request for a tax year, then the month will be decreased (i.e. first initial request filed for 2013 would use 201311 as the tax year on ERCS, the second initial request filed for 2013 would use 201310 as the tax year on ERCS, etc.). Controls should not be opened using the taxpayer's actual tax year (i.e. calendar year taxpayer would be 201312) because if the taxpayer's return is selected for examination, there would be a control base conflict on ERCS.

  6. The developer can allocate common improvement costs pursuant to a proper allocation method that it chooses; however, it cannot change the selected method during the course of the project.

  7. The types of construction qualifying for Rev. Proc. 92-29 are restricted. If apartment buildings, commercial space, recreation facilities (i.e. clubhouse with swimming pool or golf course), etc. are included with those of the town homes, condos, and single family lots, the developer cannot retain ownership of and operate/rent the apartments, commercial spaces, recreation facilities, etc.

4.8.8.22.2.2  (12-06-2013)
Rev. Proc. 92-29 Annual Statement

  1. The developer-taxpayer is required to file annual statements to indicate the degree of completion of the project. These statements are required for the first taxable year following the taxable year for which the developer received permission to use the alternative cost method and for each succeeding taxable year in which the developer uses the alternative cost method including the information required by Rev. Proc. 92-29 section 8.02.

  2. After construction is complete and all common improvement costs are known, the developer is required to file an annual statement that reconciles estimated costs to actual expenses and to determine what actual common improvement costs are actually placed in inventory. An annual statement that reconciles estimated costs to actual expenses is also required if the development project ends prematurely because the incomplete development is sold to another developer.

  3. In the instance of the sale of the entire development, if the responsibility/liability for construction of the remaining common improvements is transferred to the buyer, the seller is required to remove those estimated costs not incurred under IRC 461(h) from the budget and to reduce/correct the per unit cost allocations for past and future sales. The relieved estimated Rev. Proc. 92-29 costs that were included in the basis of lots/units sold in prior periods and claimed as cost of goods sold must be reported as either income or a reduction of expenses in the current year (the year the incomplete development is sold).

  4. The annual statement should be filed in the Rev. Proc. 92-29 project file when received. If the developer fails to file an annual statement, the coordinator should contact the developer to request a copy of the annual statement. Before contacting the developer, a transcript for the current year should be reviewed to ensure the taxpayer did not file an extension.

4.8.8.22.2.3  (12-06-2013)
Rev. Proc. 92-29 Supplemental Request

  1. A developer submits a supplemental request to request permission to extend the common improvement construction phase and to continue to claim estimated costs rather than actual costs in cost of goods sold on the tax returns. Supplemental requests are high priority. The IRS must notify the applicant in writing of approval or disapproval within 45 days of receipt of the supplemental request, except in unusual circumstances. The developer must submit a new statute extension with the supplemental request.

  2. The coordinator should review the supplemental request and the file carefully to ensure the project is in compliance with Rev. Proc. 92-29.

  3. The supplemental request should be reviewed to determine the reason behind the delay in completion (i.e. has there been a down turn in the economy; did a tornado destroy all of the work to date; or is the taxpayer trying to defer a final reconciliation adjustment that is unfavorable to them).

4.8.8.22.2.4  (12-06-2013)
Statute Protection

  1. The sample Rev. Proc. 92-29 Initial Check Sheet at Exhibit 4.8.8-10 includes a section to determine whether statute protection is needed. Not all Rev. Proc. 92-29 initial requests require statute extensions.

  2. For the tax year in which the first sale in the development occurs while construction is still in process, the developer claims as cost of goods sold basis a per-unit allocation of both actual and estimated common improvement costs. The first year of sales is the first year considered for statute protection. If the construction is scheduled to be completed with the final reconciliation due before the regular statute for the first year of sales expires, no statute extension is necessary. However, if the normal statute for the first year of sales will expire before the construction is completed and the final reconciliation is due, the statute for all sales years must be extended to one year after the due date of the income tax return containing the final reconciliation.

  3. Extension of the statute is accomplished through the use of the following forms:

    1. Form 921, Consent to Extend the Time to Assess Income Tax, is used by developers who file a Form 1040, U.S. Individual Income Tax Return or a Form 1120, U.S. Corporation Income Tax Return.

    2. Form 921–P, Consent Fixing Period of Limitation on Assessment of Income and Profits Tax, is used by developers who file TEFRA flow-through entity returns.

    3. Form 921–I, Consent Fixing Period of Limitation on Assessment of Income and Profits Tax, is used by developers who file non-TEFRA flow-through entity returns.

    4. Form 921-A, Consent Fixing Period of Limitation on Assessment of Income and Profits Tax, was used by developers who filed flow-through entity returns prior to the release of Form 921-I and Form 921-P. Since the creation of the new forms, Form 921-A is seldom used.

  4. If the taxpayer is a S corporation, then the coordinator will secure a list of the shareholders either through contacting the taxpayer in writing or by telephone. IMFOLT prints will be pulled to ensure the Form 921–I were properly completed and that both the shareholders and their spouses signed the forms. If the submitted forms are incorrect, the coordinator will either mail corrected Form 921–I to the taxpayer or ask the taxpayer to submit properly completed forms.

  5. If the taxpayer is a partnership or a limited liability company, then the coordinator will secure ownership information and determine if the entity is a non-TEFRA or TEFRA entity. If the entity is a non-TEFRA entity, then the coordinator will follow the steps discussed in IRM 4.8.8.22.2.4(4). If the entity is a TEFRA entity, the taxpayer is required to submit a Form 921-P. The coordinator will take the steps needed to ensure the Form 921-P is properly completed and signed by the tax matters partner. If the submitted forms are incorrect, the coordinator will either mail a corrected Form 921-P to the taxpayer or ask the taxpayer to submit properly completed forms.

  6. Care should be taken to ensure that the proper statute extension form is used; the taxpayer’s information is correct; the appropriate person(s) sign the form on behalf of the taxpayer; and the appropriate person signs the form on behalf of the Internal Revenue Services (IRS).

  7. A copy(s) of the executed statute extension(s) will be mailed to the taxpayer with the initial request and the supplemental request approval letters. A copy of the signed approval letter and the original executed statute extension(s) will be maintained in the project file.

4.8.8.22.2.5  (12-06-2013)
Other Miscellaneous Information

  1. If the coordinator requests information required by Rev. Proc. 92-29 (i.e. information missing from an initial request, a missing annual statement, a statute extension, a supplemental request, etc.) and the taxpayer does not provide it, a follow up letter should be sent to the taxpayer.

  2. Asking the taxpayer to provide information which they are required by Rev. Proc. 92-29 to provide to the IRS does not constitute an examination of the taxpayer. Also, if a coordinator decides to prepare spreadsheets to track the progress of a particular real estate project, this does not constitute an examination of the taxpayer.

  3. If the taxpayer is non-compliant in any way (i.e. does not provide required requested information, takes a deduction for more than they incurred, etc.), the taxpayer may be referred for examination. The coordinator should prepare a Form 5346, Examination Information Report, which includes all relevant information and forward it to their local Planning and Special Programs Office.

  4. A Rev. Proc. 92-29 real estate development project file is considered to be closed once the taxpayer has incurred all of the estimated common improvement costs. The project file may then be moved to the coordinator’s closed project shelf. ERCS collateral controls may be closed at this time.

  5. A Rev. Proc. 92-29 real estate development project file may be destroyed upon expiration of the statute of the final year of the project.

  6. The coordinator may maintain a spreadsheet file in order to keep track of their Rev. Proc. 92-29 project file inventory. This spreadsheet is not considered a separate system of records.

Exhibit 4.8.8-1 
OIC DATL Sample Rejection Letter Language

Dear Taxpayer:

We have investigated your offer in the amount of (amount of offer) to compromise your liability for the period(s) ending (tax period). We cannot accept your offer and we are rejecting the offer for the following reason(s):

[Insert optional paragraph(s) A thru D, as applicable.]

If you accept our decision, please write or call us. We will then ask you to make arrangements to pay the amount of tax, penalties, and interest you owe.

If you do not accept our decision and want a conference with an appeals officer, you should let us know that you want to protest. You should request the appeal in writing and direct it to the contact person shown above. You should request the appeal within 30 days of the date of this letter. The type of appeal you make depends on the total amount of tax, penalties, and interest you owe. Include any additional information that you want the appeals officer to consider. You may still appeal without additional information, but including it will help us to process your request promptly. Follow the instructions below for the type of appeal you may request.

If the amount is: You should:
$25,000 or less Send a letter requesting Appeals consideration. Indicate the changes you do not agree with, and the reason(s) why you do not agree.
   
Over $25,000 File a written protest with the following information:
   
1. Your name, address, social security number and daytime telephone number;
2. A statement that you want to appeal the IRS findings to the appeals office;
3. The date and symbols from the letter, or a copy of the letter showing the proposed changes and findings you do not agree with;
4. The tax periods or years involved (as shown on the letter);
5. A list of the changes you do not agree with and why you do not agree;
6. The facts supporting your position on any issue with which you do not agree;
7. Any law or other authority, if any, on which you are relying;
8. You must sign the letter, stating that it is true, under penalties of perjury as follows:

"Under penalties of perjury, I declare that I have examined the facts stated in this protest, including any accompanying documents, and to the best of my knowledge and belief, they are true, correct, and complete."

If your representative prepares and signs the protest for you, he or she may substitute a declaration stating:

  1. That he or she submitted the protest and accompanying documents, and

  2. Whether he or she knows personally that the facts stated in the protest and accompanying documents are true and correct.

You may represent yourself at your appeals conference or you may be represented by an attorney, certified public accountant, or an individual enrolled to practice before the IRS. Your representative must be qualified to practice before the IRS. If your representative appears without you, he or she must file a power of attorney or tax information authorization with the IRS before receiving or inspecting confidential information. You may use Form 2848, Power of Attorney and Declaration of Representative, or any other properly written power of attorney or authorization for this purpose.

Copies of Form 2848 are available from any IRS office, or by calling 1-800-TAX-FORM (1-800-829-3676). If you do not file an appeal request within 30 days from the date of this letter, your offer case will be closed. The date of this letter is the legal rejection date of your offer.

If you have any questions, please contact the person whose name and telephone number are shown above.

Optional Paragraphs
A. We do not consider it in the government's best interest to do so. [Further specific explanation should be provided.]
 
B. We have partially abated the original tax assessment based on the enclosed examination report. There is no longer a basis for the offer in compromise.
 
C. We have abated the original tax assessment in full based on the enclosed examination report. There is no longer a basis for the offer in compromise.
 
D. We cannot accept your offer, which is currently under examination through the Tax Equity and Fiscal Responsibility Act (TEFRA). All partnership issues to which you are a party have not been resolved. When all issues have reached settlement, you may submit another offer in compromise.

Exhibit 4.8.8-2 
OIC DATL Sample Withdrawal Letter Language

Dear Taxpayer:

This refers to your offer of (amount of offer), submitted to compromise your liability for the taxable period(s) ending (date).

[Insert Optional Paragraph(s) A through E, as appropriate.]

If you have any questions, please contact the person whose name and telephone number are shown above.

Optional Paragraphs:
A. In your letter dated (date), you requested that your offer be withdrawn and asked that the amount of (payments made with offer) be refunded to you. The offer is considered withdrawn as of the date of this letter. The payment that you were required to make with your offer is not refundable and will be applied to your account. If you paid more than the required amount and designated the additional amount as a deposit, the additional amount will be returned to you.
 
B. In your letter dated (date), you requested that your offer be withdrawn and asked that the amount of (payments made with offer) be applied to your delinquent tax liability. The offer is considered withdrawn as of the date of this letter. The payment that you were required to make with your offer will be applied as you designated on your Form 656-L, Offer in Compromise (Doubt as to Liability). If you did not make a designation, the IRS will apply your payment in the best interest of the government.
 
C. In your letter dated (date), you requested that your offer be withdrawn. The offer is considered withdrawn as of the date of this letter. The payment that you were required to make with your offer is not refundable and will be applied to your account. If you paid more than the required amount and designated the additional amount as a deposit, the additional amount will be returned to you.
 
D. During our meeting of (date), you submitted a written request for the withdrawal of your offer. The offer is considered withdrawn as of that date. The payment that you were required to make with your offer is not refundable and will be applied to your account. If you paid more than the required amount and designated the additional amount as a deposit, the additional amount will be returned to you.
 
E. On (date), you sent by certified mail a letter requesting your offer be withdrawn. The offer is considered withdrawn as of that date. The payment that you were required to make with your offer is not refundable and will be applied to your account. If you paid more than the required amount and designated the additional amount as a deposit, the additional amount will be returned to you.

Exhibit 4.8.8-3 
OIC DATL Sample Acceptance Letter Language

Dear Taxpayer:

We have accepted your offer in compromise signed and dated by you on (date). The date of acceptance is the date of this letter and our acceptance is subject to the terms and conditions on the enclosed Form 656-L, Offer in Compromise (Doubt as to Liability.) In addition to the amount you have offered, the Internal Revenue Service will add interest to the liability from the date we accept the offer until the date you completely pay the amount offered. For offers accepted on the basis of doubt as to liability, prompt payment of the amount offered is required.

If you fail to meet any of the terms and conditions of the offer, the Internal Revenue Service will issue a notice to default the agreement. After issuance of the notice, the Internal Revenue Service may:

--Immediately file suit to collect the entire unpaid balance of the offer.
--Immediately file suit to collect an amount equal to the original amount of the tax liability as liquidating damages, minus any payments already received under the terms of this offer.
--Disregard the amount of the offer and apply all amounts already paid under the offer against the original amount of the tax liability.
--File suit or levy to collect the original amount of the tax liability, without further notice of any kind.

If you have any questions, please contact the person whose name and telephone number are shown above.

Exhibit 4.8.8-4 
OIC DATL Sample Termination Letter Language

Dear Taxpayer:

This refers to the offer of (amount of offer), submitted to compromise the liability for the tax period ending (date).

We are sorry, but we have terminated our consideration of this offer. The offer is not legally acceptable as submitted because (name) is now deceased. We are returning the offer and any attachments. The payment required to be made with the offer is not refundable and will be applied to the taxpayer's account. If the taxpayer paid more than the required amount and designated the additional amount as a deposit, the additional amount will be refunded.

In order for an offer on behalf of (name) to be considered, a new Form 656-L must be filed showing (name) as deceased and signed by the legal representative for the estate of the deceased.

If you are a surviving spouse, you must also sign the new Form 656-L if it is a joint offer. If you make a payment, please submit a new check with a current date.

If you have any questions, please contact the person whose name and telephone number are shown above.

Exhibit 4.8.8-5 
Sample Forms 1296 for Transferee Assessment

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Exhibit 4.8.8-6 
Imprest Audit Worksheet

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Exhibit 4.8.8-7 
Imprest Audit Checklist

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Exhibit 4.8.8-8 
Imprest Audit Cover Memorandum

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Exhibit 4.8.8-9 
Qualified Offer Memo

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Exhibit 4.8.8-10 
Check Sheet to Determine if Rev. Proc. 92-29 Procedures Were Followed for the Initial Request

Taxpayer Information  
Taxpayer name:  
Subdivision name:  
Taxpayer EIN:  
Date Received:  
Question Yes No
1. "Request to Use Alternative Cost Method Provided by Rev. Proc. 92-29" at the top of the request?    
2. The following is listed on the request:
  1. Taxpayer's Name

  2. Taxpayer's EIN

  3. Taxpayer's Address

  4. Taxpayer's Phone Number

  5. Service Center where the return was filed

   
3. Does the request indicate the location of the tracts involved (state, county, town and plat map number)?    
4. If the request involves a subdivision, does it list the name of the subdivision?    
5. If the request involves lots, does it indicate how many lots?    
6. Did the appropriate individual sign the request under penalties of perjury? (For a regular corporation – an officer of the corporation. If the corporation is the member of a consolidated group, an officer of the common parent group must sign the declaration. If the taxpayer is a trust, the trustee must sign the declaration. If the taxpayer is a partnership, a general partner must sign it.)    
7. The request includes a schedule listing the following:
  1. The cost or other basis of the entire tract or tracts of lands where the project covered by the request is situated and a description of how the cost or other basis was determined.

  2. An inventory list of the lots in each subdivision covered by this request.

  3. The portion of the cost or other basis of the track or tracts of land allocable to each lot and a description of the manner in which the cost or other basis was allocated to each lot.

  4. If the request does not involve lots, the portion of the cost or other basis of the tract or tracts of land allocable to each property and a description of the manner in which the cost or other basis was allocated to each property.

   
8. The request includes a schedule listing the following:
  1. A description of each common improvement that the developer is contractually obligated or required by law to provide for the entire tract or tracts of land where the project covered by this request is situated.

  2. The person or persons to whom the developer is contractually obligated or required by law to provide common improvements.

  3. A description of the document evidencing the contractual obligation or requirement of law and a description of the nature of the obligation contained in the document.

  4. The estimated costs of common improvements for each common improvement and the manner in which the estimate was made.

  5. The portion of the estimated cost of common improvements allocable to each lot and a description of the manner in which the estimated cost was allocated to each lot.

  6. To the extent that the request does not involve lots, the portion of the estimated cost of common improvements allocable to each property and a description of the manner in which the estimated cost was allocated to each property.

  7. The estimated date production will begin on each common improvement and an estimated date of completion of the common improvement.

   
Is a statute extension needed for this project under Rev. Proc. 92-29? Response:
Project Name  
1. The year taxpayer specifies it expects to complete the project:  
2. Due date or filing date for the above tax return:  
3. Add one year to the above. Date that statute extension is needed to:  
4. Year of request:  
5. Filing date of the return filed for the year of request:  
6. Statute of limitations of return for the year of request:  
Compare the dates show in items #3 and #6 above.
If the date in #3 is earlier or the same as the date in #6, NO statute extension is needed.
If the date in #3 is later than the date in #6, a statute extension IS needed.
If a statute extension is required, was it submitted and signed by the proper person?  
Check Sheet completed by:  
Date of Completion:  

Exhibit 4.8.8-11 
Project Status Sheet—Revenue Procedure 92-29

Taxpayer Information  
Taxpayer Name:  
Taxpayer EIN:  
Return Type:  
Project Name:  
Total # of Lots:  
Contact Person:  
Phone Number:  
Year of Request Original Return Due Date Return Extension Date Return Filed Date Request Received Date Additional Information Letter Date Request Approved Date
             
Project Start Date Estimated Completion Date Completion Year Return Due Date Consent Date (add one year) Normal Statute Date (IRC 6501 Form 921-I or Form 921-P Executed?
           
Periods Covered by Consent:
Year(s)            
Statute Date            
Annual Statement Required
Each Year After Project Start Year Original Return Due Date Return Extension Date Statement Received Date Additional Information Letter Date Unsold Lots (EOY)
           
           
           
           
           
           
Supplemental Request
New Estimated Completion Date Old Statute Date New Statute Date Form 921-I or Form 921-P Executed? Request Received Date Approved or Disapproved Date (45 days)
           
Project Completion Date:  

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