4.8.9  Statutory Notices of Deficiency (Cont. 3)

4.8.9.22 
Errors Found in Statutory Notices of Deficiency

4.8.9.22.3  (07-09-2013)
Should a New Notice of Deficiency Be Issued?

  1. The IRS is not precluded from issuing a second notice of deficiency as long as the taxpayer has not yet filed their Tax Court petition. See Jones v. United States, 889 F.2d 1448, 1450-1451 (5th Cir. 1989), Gmelin v. Commissioner, T.C. Memo 1988-338. However, the issuance of a second notice does not rescind the first. This is because rescission of a notice of deficiency is discretionary on the part of the Secretary and such notice of deficiency will be rescinded only with taxpayer consent. Section 4.01 of Rev. Proc. 98-54, 1998-2 C.B. 531. Also see IRC 6212(d), Notice of Deficiency.

  2. The issuance of a second notice prior to expiration of the time the taxpayer has to petition the Tax Court (for the original notice) gives the taxpayer the option to petition either notice. G.C.M. 33366, In re: Statutory Notice of Deficiency, I-2166 (November 3, 1966), at 6. While it may be legally sound to reissue a notice of deficiency, the determination to issue a new notice of deficiency should be made on a case by case basis in consultation with local area counsel.

    Reminder:

    If a second notice is issued, it should be issued as if the first notice was not (i.e. it should include the entire deficiency, not just an additional amount above that shown in the first notice).

4.8.9.22.4  (07-09-2013)
Effect of an Invalid Statutory Notice of Deficiency

  1. IRC 6503(a), Suspension of Running of Period of Limitation, Issuance of Statutory Notice of Deficiency, provides that the statute of limitations for a tax year is suspended during the time the IRS is prohibited from making an assessment (i.e., during the time a notice of deficiency is outstanding).

  2. No exception is made in IRC 6503(a) for invalid statutory notices of deficiency or notices which contain an error.

  3. If a notice is considered invalid due to an error and the normal statute of limitations is expired, the IRS is prohibited from taking action. This means that the errors cannot be corrected in order to issue a new notice of deficiency and no assessment can be made.

  4. If a notice is considered invalid due to an error and the normal statute of limitations is still open, a new notice of deficiency should be issued in order to correct the defects and in order to permit assessment of the deficiency. The issuance of a new notice of deficiency will begin another suspense period and the taxpayer will have 90 days (150 days) to file a petition in Tax Court.

4.8.9.23  (07-09-2013)
Protests, Correspondence and Waivers Received After Issuance of Notice of Deficiency

  1. When the taxpayer submits a protest, additional information or requests reconsideration of the deficiency, the case file should be routed back to the designated statutory notice reviewer:

    1. Letter 556 (DO), Acknowledgement of Protests, Correspondence and Requests for Interviews, may be used to acknowledge receipt if the taxpayer is not contacted by telephone.

    2. The taxpayer must be clearly informed that reconsideration of the case will not suspend or extend the period for filing a petition with the Tax Court.

    3. Any contact or actions taken after the notice of deficiency is issued must be recorded in the administrative file.

  2. Similarly, responses to telephone inquiries on technical and procedural questions will be coordinated with the designated technical reviewer.

  3. If a protest is received, the designated technical person will review the protest to determine if it is sufficient. The reviewer will also coordinate with the appeals office to determine if appeals will accept the case file for consideration given that a notice of deficiency has already been issued.

  4. For other correspondence, the designated reviewer will determine what necessary action should be taken, if any, and will communicate this determination to the taxpayer and/or representative.

4.8.9.23.1  (07-09-2013)
Protests for Appeals Hearings

  1. Following acknowledgement, the valid protest will be transmitted with the administrative file to the appropriate appeals office serving the area making the determination of the tax liability as prescribed in IRM 8.2.2.2, Examination Issues Statutory Notice of Deficiency. The designated notice reviewer must coordinate with appeals before forwarding the case to appeals.

  2. The foregoing will not apply in the following situations:

    1. The notice of deficiency contains an obvious error or omission in the computation of tax and correction will permit an immediate closing of the case.

    2. Appeals has waived jurisdiction in accordance with IRM 1.2.47.9, Delegation Order 8-8 (formerly DO-66, Rev. 15).

4.8.9.23.2  (07-09-2013)
Additional Information and Reconsideration Requests

  1. Following acknowledgement, the correspondence will be associated with the case file. The case file will be returned to the designated technical person for consideration of the additional information.

  2. The designated technical person will determine the action to be taken based on the correspondence and requests for interview/conference submitted by the taxpayer.

4.8.9.23.2.1  (07-09-2013)
Notice of Deficiency Reconsideration Cases

  1. A notice of deficiency reconsideration case is one in which the taxpayer received a notice of deficiency and requests reconsideration of the deficiency before the 90 days (or 150 days) have expired.

    Reminder:

    Delinquent returns submitted by the taxpayer are reconsiderations. See IRM 4.8.9.23.2.2, Delinquent Return Secured.

  2. The tax liability shown in the notice of deficiency cannot be increased. Exceptions are found in IRC 6212 and IRC 6213.

  3. New issues cannot be raised unless introduced by the taxpayer. Affirmative issues can be raised by the IRS if the taxpayer files a petition with the Tax Court.

  4. The notice of deficiency issued will not be voided and the assembly should not be disturbed.

4.8.9.23.2.2  (07-09-2013)
Delinquent Return Secured

  1. If the taxpayer, in a non-filer case, provides a completed tax return after the notice of deficiency is issued, treat the return as "substantial documentation" and follow normal examination reconsideration procedures. This applies whether or not an assessment has been made (TC 290 or 300) unless a petition has been filed with the Tax Court.

  2. If a petition has been filed with the Tax Court, the delinquent return will be transmitted to the appropriate appeals office that serves the area making the determination of the tax liability.

  3. The statute of limitations must be updated to correctly reflect the receipt of the delinquent return.

4.8.9.23.2.3  (07-09-2013)
Information Results in Decrease to Deficiency

  1. If the information submitted by the taxpayer results in a decrease to the deficiency shown in the notice of deficiency, the reviewer will take the following actions:

    1. Determine from the taxpayer if he or she has petitioned the United States Tax Court. If the taxpayer has petitioned the Tax Court, contact area counsel to resolve issues presented by the taxpayer's documentation. If the taxpayer has not petitioned the Tax Court proceed per the below procedures.

    2. Prepare a supplemental examination report. On the supplemental report, adjust the amounts shown on the original return. Clearly label the top of the report "Supplement to the Notice of Deficiency." This supplemental report does not nullify or supersede the original notice of deficiency, nor does it extend the period for filing a petition with the Tax Court.

    3. In the "Other Information" section of the RAR, make the following remarks: "This report is only a supplement to the notice of deficiency. It does not supersede the previous report nor does it serve to extend the 90 day period for filing a petition to the United States Tax Court." Additionally, the "45 day" or the "subject to the area director" clauses should be removed on supplemental reports.

    4. Send Letter 555-T, Reconsideration After Statutory Notice, to the taxpayer. Keep a copy in the case file. For married filing joint returns, a copy of Letter 555-T will be sent to each spouse separately, even if they reside at the same address.

    5. If the information is in the form of an original delinquent return, assess the tax shown on the originally filed delinquent return and applicable delinquency and estimated tax penalties as a partial assessment.

    6. Return the case file to suspense files to finish the 90 day or 150 day suspense period.

4.8.9.23.2.4  (07-09-2013)
Information Results in No Change to Deficiency

  1. If the information submitted by the taxpayer does not change the deficiency outlined in the notice of deficiency, the reviewer will take the following actions:

    1. Send Letter 555-T to the taxpayer, maintaining a copy for the case file. For married filing joint returns, a copy of Letter 555-T will be sent to each spouse separately, even if they reside at the same address.

    2. Return case file to 90 day suspense files.

4.8.9.23.2.5  (07-09-2013)
Information Results in No Deficiency

  1. If the information submitted by the taxpayer results in no additional tax liability to the tax return as filed, the reviewer will:

    1. Prepare a supplemental examination report. On the supplemental report, adjust the amounts shown on the original return. Clearly label the top of the report "Supplement to the Notice of Deficiency." This supplemental report does not nullify or supersede the original notice of deficiency, nor does it extend the period for filing a petition with the Tax Court. The supplemental report will reflect a deficiency and balance due of $0.00 and will, therefore, be a "no change report."

    2. Send Letter 645-T, No Change - After Statutory Notice Issued, to the taxpayer. For married filing joint returns, a copy of Letter 645-T will be sent to each spouse separate, even if they reside at the same address. One copy of Letter 645-T should also be maintained in the case file. Letter 645-T is the official closing letter for the case and signifies that no further examination activity may be taken without instituting re-opening procedures.

    3. Close the case as "no change."

4.8.9.23.3  (07-09-2013)
Waivers of Restriction on Assessment

  1. When a signed agreement or waiver form is received, the 90 day or 150 day suspense period is terminated from the date of the agreement. An assessment must be made within 60 days, plus the days remaining on the statute at the time the statutory notice of deficiency was issued.

  2. The following forms are considered agreements:

    • Form 870, Waiver of Restrictions on Assessment and Collection of Deficiency in Tax and Acceptance of Overassessment — used for individuals, corporations and fiduciaries

    • Form 890, Waiver of Restrictions on Assessments and Collection of Deficiency and Acceptance of Overassessment

    • Form 4089-B, Notice of Deficiency - Waiver

    • Form 4549, Income Tax Examination Changes

    • Form 5564-A, Notice of Deficiency - Waiver

  3. If the taxpayer(s) waives the restrictions upon assessment and collection of the deficiency in whole during the 90 day period, the case will be transmitted immediately to CCP for assessment of the deficiency. The notice clerk will take the following actions:

    1. Recompute the statute date based on the agreement receipt date. See Exhibit 4.8.9-3 for the steps on recomputing the statute date. Enter the new statute date on the control card and Form 895, Notice of Statute Expiration.

    2. Annotate the control file to show that a full agreement was received and close out all controls.

    3. Clearly identify or flag all statute cases. The AIMS database must be updated to reflect the new statute date. Prepare Form 5348, AIMS/ERCS Update, to reflect the recomputed statute date and process through normal channels. Ensure the statute is updated on AIMS/ERCS prior to closing the case to CCP.

  4. If the waiver used by the taxpayer to agree to the deficiency is Form 4549 (also known as "agreed report," ) Letter 987, Agreed Income Tax Change Letter, will be prepared. The letter should not be dated but will be signed by the Technical Services group manager. CCP will date and mail the letter to the taxpayer.

    Note:

    Letter 987 is only required if Form 4549 is used as the waiver. If the taxpayer agrees to the deficiency using any other waiver form (Form 4089-B, Form 870, etc.), then Letter 987 is not required.

  5. If the taxpayer waives the restrictions upon assessment and collection of the deficiency in part (i.e., partial agreement), the waiver and the return will be transmitted to CCP for assessment of the agreed portion of the deficiency.

    1. Flag these cases as partially agreed cases for identification and processing purposes.

    2. Clearly identify or flag all statute cases.

    3. Forward copies of the examination report, the agreement, and Form 5344 to CCP requesting that a verification of the partial assessment be returned to the 90 day suspense file area.

    4. The case will remain in the suspense file awaiting either further correspondence, petition, or default on the unagreed portion of the tax deficiency.

    5. The statutory notice reviewer will ensure that the waiver and tax return are restored to the case in suspense.

    6. If the case was previously transmitted to appeals, the waiver will be transmitted to that office upon receipt.

4.8.9.23.3.1  (07-09-2013)
Receipt of Waiver or Agreement

  1. Upon receipt of a signed waiver or agreement, the notice clerk takes the following actions:

    1. Date stamp the waiver or agreement form and associate it with the case file. If an agreement is received prior to the closing of the case (Status Code 90), use an agreed disposal code.

    2. Examine the waiver or agreement form to determine if it is properly signed by the taxpayer(s).

    3. Recompute the new statute date for assessment and update the ASED using Form 5348.

    4. Update the Form 5344 with the agreed disposal code on RGS.

    5. Close the case agreed to CCP for assessment of the deficiency.

  2. The processing procedures reflected in IRM 4.10.8.5, Partially Agreed Cases, and IRM 4.4.25, Quick Assessments, should be followed for all quick assessments and partial assessments. Quick assessments include the following cases:

    1. Over $100,000 agreed unpaid deficiencies if the assessment will not be made within 30 days from the agreement date,

    2. Less than 60 days remaining on the statute,

    3. Statutes on defaulted statutory notice cases where the notice was issued within 30 days of the statute date, and

    4. Bankruptcy cases petitioned prior to 10/1/79.

      Note:

      If a waiver of restriction on assessment is received on a docketed case that has already been forwarded to the Office of Appeals, the waiver should be date stamped and transmitted immediately to the appeals office to which the case was transferred. The waiver should be transmitted with a Form 3210, Document Transmittal, which is annotated to reflect the recomputed ASED and the fact that the waiver relates to a case in 90 day status.

4.8.9.23.3.2  (07-09-2013)
Waiver or Agreement Received on Joint Return When Only One Spouse Has Signed Waiver of Restrictions

  1. If the notice of deficiency waiver or agreement form received is signed by only one spouse, the 90 or 150 day period is terminated for the signing spouse only.

    1. Compute the new statute date for assessment.

    2. Assess the deficiency for the signing spouse only using MFT 31 procedures. See IRM 21.6.8, Split Spousal Assessment (MFT 31), for additional information. No assessment may be made for the non-signing spouse before expiration of the 90 or 150 day suspension period.

    3. Suspend the case pending agreement, default, or petition from the non-signing spouse.

    4. Upon default, close the case for assessment of the non-signing spouse using MFT 31 procedures.

  2. If the notice of deficiency waiver or agreement form received is signed by one spouse and the deficiency is paid in full, the 90 or 150 day period is terminated for the signing spouse only.

    1. Assess the deficiency for the signing spouse using MFT 31 procedures.

    2. No assessment may be made for the non-signing spouse before expiration of the 90 or 150 day suspension period.

    3. Suspense the case awaiting agreement, default, or petition from non-signing spouse.

    4. Upon default, close the case for assessment of the non-signing spouse using MFT 31 procedures. To prevent duplicate collection, also add to the Form 3198, "Input TC 971, Action Code 110 to non-signing spouse's MFT 31 accounts, cross referencing the other spouse's TIN."

4.8.9.23.3.3  (07-09-2013)
Full Payment of Deficiency And No Waiver or Agreement Received

  1. Assess the deficiency (jointly, if joint return) upon default and close the case. Do not use this procedure if the taxpayer designates the payment as a deposit (also known as a "Section 6603 deposit)." See Rev. Proc. 2005-18, 2005-1 C.B. 798.

4.8.9.24  (07-09-2013)
Appeals Waiver of Jurisdiction in Notice of Deficiency Cases

  1. Delegation Order 8-8 (formerly DO-66, Rev. 15), IRM 1.2.47.9, vests settlement jurisdiction in appeals offices during the 90/150 day period in all protested (to Office of Appeals) cases in which the exam area director issued the notices of deficiency.

  2. The delegation order permits the chief appeals to release jurisdiction by waiver to the office of the Exam area director, which issued the notice.

  3. No waiver will be made in any case in which:

    1. Criminal prosecution has been recommended and not finally disposed of, or

    2. The determination in the notice of deficiency includes the fraud penalty.

  4. Appeals may waive jurisdiction in examination cases regardless of the amount involved. See IRM 8.2.2.2, Appeals - Processing 90-Day Cases and Defaulted Notices

  5. When appeals releases jurisdiction to the Exam area director, the exam area director assumes complete jurisdiction of the case during the 90 day or 150 day period. This includes the authority to transfer the case to another area.

  6. Waiver of jurisdiction by appeals does not increase the authority of an Examination function examiner. The authority of an examiner is the same in a 90 day case as in any other case.

4.8.9.24.1  (07-09-2013)
Communication with Taxpayers

  1. The taxpayer must be clearly informed that reconsideration of the case will in no way serve to suspend or extend the period for filing a petition with the Tax Court.

  2. If sufficient time remains during the 90 or 150 day period, the taxpayer will not be denied a hearing before appeals, if an appeals conference is specifically requested by the taxpayer. The request for an appeals conference will be coordinated with appeals on a case-by-case basis to determine if appeals will conference the case or release jurisdiction to the area office.

  3. If additional information is received that would decrease the deficiency amount on the notice of deficiency, a supplemental report to the notice of deficiency will be prepared. Refer to IRM 4.8.9.23.2.3, Information Results in Decrease to Deficiency.

4.8.9.24.2  (07-09-2013)
Agreement Secured

  1. If the taxpayer's liability is adjusted and an agreement is reached and signed, the taxpayer will be advised there is no need to file a petition with the Tax Court.

  2. When a waiver or agreement is received, the case can be closed as outlined in IRM 4.8.9.23.2.3, Information Results in Decrease to Deficiency.

4.8.9.25  (07-09-2013)
United States Tax Court Petition Filed

  1. A petition is a taxpayer's request to the Tax Court for a redetermination of the deficiency. As noted elsewhere in this section, a petition for a notice of deficiency must be filed within 90 days (150 days if either the taxpayer is outside the United States when the notice is mailed or the notice is mailed to an address outside the United States) of the date the notice of deficiency was issued.

  2. A docketed case is a tax case assigned a docket number in the United States Tax Court. These cases include petitions filed in response to the following:

    • Notices of deficiency

    • Final adverse determination letters

    • Final partnership administrative adjustments

  3. A regular case is a tax case with a deficiency of more than $25,000 (including deficiency and penalties) for any one taxable period.

  4. Taxpayers may elect to have their case conducted under the court's simplified small tax case or "S" case procedures. Trials in small tax cases are generally less formal and result in speedier disposition. However, decisions entered pursuant to small tax case procedures cannot be appealed. Taxpayers may elect small tax case procedures for tax disputes involving $25,000 or less (including tax and penalties).

  5. Technical Services 90 day suspense units are responsible for monitoring the docket list to determine if a petition is filed in response to a notice of deficiency. If a petition is filed, the case must be located, processed for closing and transmitted to appeals within ten (10) calendar days of the receipt of the docket list.

  6. Under IRC 6213(a), the taxpayer has 90 days (150 days if either the taxpayer is outside the United States when the notice is mailed or the notice is mailed to an address outside the United States) after the notice of deficiency is mailed (not counting Saturday, Sunday, or a legal holiday in the District of Columbia as the last day) to file a petition with the United States Tax Court for a redetermination of the deficiency. Per IRC 6213(c), if the taxpayer does not file a timely petition with the tax court, the deficiency will be assessed and will be paid upon notice and demand from the Secretary.

  7. IRC 7502 provides that, if the requirements of that section are met, a document (including a petition to the tax court) is deemed to be filed on the date of the postmark stamped on the envelope or other appropriate wrapper (envelope) in which the document was mailed. Thus, if the envelope that contains the document has a timely postmark, the document is considered timely filed even if it is received after the last date, or the last day of the period, prescribed for filing the document.

4.8.9.25.1  (07-09-2013)
Petition Mailed to IRS Office

  1. Generally, IRC 7502 does not apply unless the document is mailed in accordance with the following requirements:

    1. Envelope and address - The document must be contained in an envelope, properly addressed to the agency, officer or office with which the document is required to be filed.

    2. Timely deposited in United States mail - The document must be deposited within the prescribed time in the mail in the United States with sufficient postage prepaid.

  2. Occasionally, the taxpayer or representative mails a petition to the IRS, (specifically to the office that issued the notice of deficiency) rather than to the United States Tax Court. In such a case, the petition is not considered "properly addressed to the office with which the document is required to be filed," and thus, the petition must be received by the Tax Court by the 90th day (150th day if either the taxpayer is outside the United States when the notice is mailed or the notice is mailed to an address outside the United States).

  3. If the petition is received by the IRS before the expiration of the 90 day (150 day) period, the petition should be mailed by Technical Services to the Tax Court using regular mail that is postmarked on or before the 90 day (150 day) period expires. The petition should be sent under cover of transmittal Letter 4370, Petition Transmitted to the US Tax Court, to the Tax Court. The taxpayer should also be sent a letter to inform him or her the petition was forwarded. Letter 4371, Petition Forwarded to the Tax Court, is used for this purpose.

  4. If Technical Services receives the petition past the 90 day period (even if the petitioner's envelope is postmarked before the 90th day) or it cannot be postmarked by the IRS prior to the expiration of the 90 day period, Technical Services will return the petition to the taxpayer using Letter 4372, Petition Returned to the Taxpayer, to indicate that the document was mistakenly mailed to the wrong entity.

    Example:

    If Technical Services receives a petition on the 90th day, but by the time it is processed through the clerical staff the 90th day has expired, the petition will be returned to the taxpayer.

  5. Technical Services should not forward a petition to the Tax Court if the 90 day period has already expired.

4.8.9.25.2  (07-09-2013)
Importance of Timing

  1. The United States Tax Court requires the filing of an "answer" by the Commissioner of Internal Revenue Service in all docketed cases.

  2. Employees responsible for monitoring the docket list must be aware of and take all necessary actions to ensure counsel receives docketed administrative files with sufficient time remaining to meet the due date established by the United States Tax Court to answer the petition.

  3. The "answer due date," or the time within which the petition must be answered, is set by the tax court at sixty (60) days from the date the petition is served on the IRS. The answer due date for small tax case petitions is the same as it is for regular tax case petitions.

  4. Counsel needs time to prepare its answer. Therefore appeals must ensure the cases are received in counsel no later than twenty (20) days prior to the answer due date.

  5. In order to meet these time frames, it is imperative that Technical Services employees timely identify, locate and process petitioned cases to the appropriate appeals office within ten (10) calendar days.

4.8.9.25.3  (07-09-2013)
Identifying Petitioned Cases

  1. The docket list is a list of cases docketed by the United States Tax Court.

  2. Once a petition is received by the Tax Court, it is given a number, processed, and then served on the IRS.

4.8.9.25.3.1  (07-09-2013)
Tax Litigation Counsel Automated Tracking System

  1. The docket list is established by the docket and records branch, legal processing division, in the office of the associate chief counsel directly on the tax litigation counsel automated tracking system (TLCATS) after the Tax Court serves the taxpayer's petition(s) to the Commissioner. Once entered on TLCATS, the petitions and files are mailed to the assigned appeals offices. Additionally, a hard copy of the list is e-mailed as an attachment to employees in the various operating divisions/functions who are members of an e-mail distribution list maintained by counsel.

  2. The information contained on the hard copy docket list is obtained from the taxpayer's petition form and the notice of deficiency (if attached). If the petition form is completed properly, the hardcopy docket list shows:

    • Docket list number

    • Date list prepared by counsel

    • Date petition served on IRS

    • Docket number for each case

    • Notice date (date of notice of deficiency)

    • Taxpayer(s) name, address, and TIN(s)

    • Years included in the statutory notice of deficiency (if known)

    • Years petitioned (if identified)

    • Signed by both for MFJ

    • Postmark date

    • Source of notice, if known

    • Appeals office

    • Area counsel office

  3. In addition to creating and distributing the hard-copy docket list by e-mail, counsel also posts the docket list as a file to a server.

  4. The hard copy docket list is one method of identifying taxpayers who have filed petitions to the United States Tax Court.

  5. One advantage of the hard copy docket list is the speed of delivery. The docket list is usually generated within one or two business days of when the petitions are received. Since the list is then disseminated via e-mail to the users on the distribution list, it is received no more than three (3) business days of the petitions receipt.

  6. One disadvantage of the hard copy docket list is that the list includes the petitions for all areas that are in docket number order only. Therefore, all users get the same listing and must go through each page to locate the petitions for the cases they control or need to locate.

  7. For more detailed information concerning TLCATS, refer to CCDM 30.7.1, Management Systems; Information Systems.

4.8.9.25.3.2  (07-09-2013)
Docketed Information Management System

  1. The docketed information management system (DIMS) is an automated appeals program similar to the docket list.

  2. Appeals downloads the docket list file from the server and posts it on its automated system, DIMS, a sub-system of the Appeals Centralized database System (ACDS).

  3. The DIMS system is available to both appeals and non-appeals employees responsible for issuing and monitoring notices or letters containing Tax Court rights. Access to DIMS is obtained through the Online 5081 process.

  4. The DIMS system listing is another method of identifying taxpayers who have filed petitions to the United States Tax Court.

  5. One advantage of the DIMS system over the hard copy docket list is that users are able to print either the entire list or sort the list so that it contains only the cases they control or need to locate.

  6. One disadvantage of the DIMS system is that it is produced after the hard copy docket list.

  7. For more detailed information concerning DIMS, refer to IRM 8.4.1, Processing Docketed Cases.

4.8.9.25.3.3  (07-09-2013)
United States Tax Court Web Site

  1. The last method of identifying dockets cases is through the United StatesTax Court web site (http://www.ustaxcourt.gov). This method is used for 90 day cases that are not otherwise identified as petitioned on the hard copy docket list or the DIMS list. These cases would be defaulted and processed for assessment. Before the cases are closed to CCP, each defaulted taxpayer is checked against the taxpayer database on the tax court site.

  2. On the main page of the web site, select the tab titled "Docket Inquiry."

  3. The docket inquiry screen allows the user to search by docket number, individual party name or corporate name keyword. Since this method is used primarily as a safe guard for defaulted cases, the docket number is usually not known.

  4. The docket inquiry page also has a docket inquiry help link that will provide information on how to use the search functions. The help resource does not provide a topical search database. It merely provides general information on how to use each of the three search functions.

  5. The "Individual Party Name" search page asks for the taxpayer's last name, first name, middle initial, and the state code.

  6. The "Corporate Name Keyword" asks for at least one keyword. The page also includes a link to a list of excluded keywords that cannot be used in the keyword search.

  7. Docket records are available on the web site for cases filed on or after May 1, 1986. The docket entries are updated Monday through Friday at approximately 6:00 p.m.

  8. The advantage to this method is that it ensures the most diligent search possible and helps to prevent a situation in which Technical Services must re-establish a closed case due to a late identified petitioned taxpayer.

  9. The disadvantage to this method is that it requires the direct search by taxpayer name. Each individual taxpayer must be searched separately.

4.8.9.25.4  (07-09-2013)
Processing Petitioned Cases

  1. Technical Services 90 day suspense unit personnel are expected to use the DIMS generated docket list to pull up docket lists in numerical (and consequently, chronological) order. DIMS is the preferred method because users can sort the list so that it contains only the cases they control or need to locate. This, in turn, reduces the overall time to identify petitioned taxpayers.

    1. While the use of DIMS is required, Technical Services personnel may also use the hard copy docket list or the Tax Court web site or both.

    2. Using multiple methods to identify petitioned taxpayers ensures Technical Services can identify all petitioned cases to the extent possible. This helps prevent the need to re-establish prematurely closed cases where Technical Services was notified of the petitions after the cases defaulted.

  2. Upon retrieval, the docket list will be date stamped.

  3. Determine the taxpayer(s) who have filed petitions. Perform research on all taxpayers containing the unique office code, as well as those with "unknown" office codes.

    Caution:

    For MFJ taxpayers, ensure that both taxpayer names are researched.

  4. The unknown cases are taxpayers without a pre-determined area office code. These taxpayers should be researched to determine the office to which they are assigned.

  5. Within ten (10) calendar days of receiving the docket list, the cases must be located, processed for closing and transmitted to appeals.

    1. The 90 day suspense unit personnel will locate the case file, close out all controls and forward the case file to the appropriate closing program. The docket list will be annotated to indicate the specific action taken on the case and the date. The RGS electronic file should be archived to ensure accessibility to appeals.

    2. If a case has been transferred to another area, notify the area where the case was transferred. Give them the date the petition was filed, the name of the petitioner, and the year(s) involved. A copy of the docket list page identifying the taxpayer and the tax year(s) should be forwarded to the area where the case was transferred.

    3. If it is determined that the case is physically located in another area or campus, telephone the office having physical possession of the case to inform them that the taxpayer has petitioned the Tax Court. The docket list number and petition date will be provided.

  6. After closing the case, it must be forwarded immediately to appeals (hand carried whenever possible) to obtain immediate acknowledgement of the transmittal, via Form 3210.

  7. At the end of each month, the tickler file for Form 3210 will be checked and follow-up action taken on any Form 3210 for which part 4 has been outstanding for 30 days or more. This is done to determine whether the cases were received by appeals or why Part 4 was not returned.

  8. When the appeals acknowledgment copy is received from appeals, destroy the tickler file copy and replace it with the appeals acknowledgement copy. The appeals acknowledgement copy will be kept for one year from the date of receipt.

4.8.9.25.5  (07-09-2013)
Electronically Filed Returns

  1. If the return was electronically filed, Examination has the responsibility to request the signature document, Form 8453, and original Forms W-2 (if the electronically filed return required such forms to be submitted) before the case is forwarded to appeals. See IRM Exhibit 4.4.1-1, Reference Guide, Form 8453 for information about requesting these documents. Make arrangements with the local appeals Office as to the designated person (and address) to whom Form 8453 should be forwarded. Examination will print a copy of the ELFRQ or ESTAB request and attach it to the case file before forwarding the case to appeals.

  2. For electronically filed returns using PIN signatures, use command code TRDBV to research specific information on electronically filed returns and TRPRT to request prints of electronically filed returns.

4.8.9.25.6  (07-09-2013)
Unlocatable Case Files

  1. If the case cannot be physically located within three days of receipt of the docket list, prepare Form 5348, AIMS/ERCS Update (Examination Update), to input freeze code "Q" on AIMS. Any area attempting to update the status of the "Q" freeze identified case will forward the case to Technical Services' suspense file area upon notification of the freeze code. When the case is located, reverse the "Q" freeze code via a Form 5348.

  2. The electronic RGS case should be retrieved from CCP if the case has been assigned or through your local RGS coordinator if the case is still in Status Code 51. A "dummy" case should be prepared and should include the most recent RAR and any of the examiner's workpapers available in the electronic file. The notice package should also be included in the dummy file if available in the electronic file. This "dummy" case should be annotated as a "dummy file" on the Form 3198 attached to the front of the file and forwarded via Form 3210 to the appeals DIMS office at the address shown on the appeals website at http://appeals.web.irs.gov/APS/DIMS so counsel will be able to prepare a timely response to the petition. Technical Services contact information should be annotated on the Form 3198 and if possible provided on the DIMS Tracking system.

  3. Once the original case file is located, the AMCLS should be input to process the original case to the appeals office designated on the docket list to associate with the "dummy" case file in appeals or counsel.

4.8.9.25.7  (07-09-2013)
Status 90 Cases

  1. Occasionally, a case appearing on the docket list may have been defaulted, tax assessed and closed to the files area in the campus before the docket list was received. AIMS research will indicate Status Code 90. If this occurs, Technical Services is responsible for preparing Form 3177, Notice of Action for Entry on Master File, to input CC STAUP (15 cycles) to prevent the issuance of balance due notices to the taxpayer.

  2. When a docketed case that is in AIMS Status Code 90 is identified, a current print of a full AMDISA or TXMOD must be secured. This print will be attached to a copy of the appropriate page of the docket list and will be forwarded to appeals via Form 3210. Appeals will also be notified that the STAUP has been input to stop the notices. APPEALS WILL BE RESPONSIBLE FOR MONITORING THE STAUP TO INCREASE/DECREASE THE NOTICE SUPPRESSION TIME FRAME AND RETRIEVAL OF THE CASE FILE FROM THE CAMPUS.

  3. Technical Services will build a file that includes the following:

    1. Full AMDISA and TXMOD prints of all docketed tax periods.

    2. A copy of the page in the docket list identifying the taxpayer, tax periods, docket number and appeals office.

    3. Photocopy of the closed control card showing the date the 90 day letter was issued.

    4. Form 5348 requesting CC AMSTUR, Status Code 24.

      Note:

      With the implementation of Technical Service codes, Status Code 90 cases must first be reopened in Status Code 21 with a Technical Service code and then updated to Status Code 24.

  4. If no data is available, the file will include the following:

    1. TXMOD and/or MFTRA print of the docketed tax periods which verify the TIN and reflects an examination closure.

    2. Record of Form 5348 requesting AMSTUR re-establishing the AIMS database.

    3. A copy of the page on the docket list identifying the taxpayer, tax periods, docket number and appeals office.

  5. The Form 5348 will be given to the local AIMS/ERCS Unit to input an AMSTUR which will re-establish the case in Status Code 24. [NOTE: AMSTUR cannot be input in the same cycle that the case was closed to Status Code 90.]

  6. Once the case has been established in Status Code 24, Technical Services will take the following actions:

    1. Retrieve from RGS CEAS the Form 5344, Examination Closing Record, to input AMCLSE to process the case to appeals. The RGS electronic file should be archived to ensure accessibility by appeals.

    2. Enclose the AIMS print, verifying appeals status in the re-constructed file and forward to appeals for association with the original case file.

    Reminder:

    APPEALS WILL REQUEST ABATEMENT OF THE ASSESSMENT.

4.8.9.25.8  (07-09-2013)
Non-Petitioning Spouse

  1. A non-petitioning spouse case occurs when one spouse files a petition with the Tax Court or otherwise avails himself/herself of the appeal rights on a proposed joint return deficiency and the other spouse agrees to the deficiency or does not take any action (i.e., defaults).

  2. Where it appears only one spouse has petitioned the Tax Court, forward the petitioning spouse and the case file to appeals and prepare a dummy file for the non-petitioning spouse to suspend the non-petitioning spouse until the non-petitioning spouse defaults, agrees, or submits a petition.

    IF the 90 day period for the NON-PETITIONING spouse has ... THEN ...
    Expired and the statutory notice of deficiency has defaulted Establish a MFT 31 account for the non-petitioning spouse and request a partial assessment be made to CCP. After the MFT 31 account for the non-petitioning spouse has been established and the partial assessment has been made, send both the petitioning spouse and the non-petitioning spouse to appeals. An AMCLS should be processed for both spouses utilizing a Disposal Code 07 for the non-petitioning spouse and a Disposal Code 11 for the petitioning spouse. See IRM 21.6.8, Split Spousal Assessments (MFT 31) and IRM 4.4.12.4.45.5 , MFT 31. If the same tax will be assessed on both spouses, $1 should be input in Item 18 of the Form 5344 for the non-petitioning spouse.

    Note:

    The MFT 31 account should be created at the point it is known that one spouse has petitioned and the other spouse has not. The MFT 31 account must be established prior to updating the petitioning spouse to Status Code 81.

    Not yet expired Prepare a "dummy" case file and retain it in the 90 day suspense file. MAINTAIN STATUTE CONTROL. If an agreement for the non-petitioning spouse is received or the case defaults, make a MFT 31 assessment as a partial for that spouse and forward to appeals via AMCLS, Disposal Code 07 and enter $1 in Item 18 of Form 5344.

    Note:

    The MFT 31 account should be created at the point it is known that one spouse has petitioned and the other spouse has not. The MFT 31 account must be established prior to updating the petitioning spouse to Status Code 81.

  3. When forwarding the petitioned spouse to appeals include the following information on a routing slip attached to the case file:

    "This is a non-petitioning spouse case. Technical Services has retained a dummy file for the non-petitioning spouse awaiting the conclusion of the 90 day suspense period. Technical Services will assess the non-petitioning spouse if he or she agrees to the deficiency or if he or she defaults. After assessing the non-petitioning spouse, Technical Services will forward the assessment documents and dummy file to your office.

    Petitioning spouse's name and TIN
    Non-petitioning spouse's name and TIN
    Default date of statutory notice of deficiency"

  4. After the non-petitioning spouse case has been assessed or the non-petitioning spouse files a separate petition, forward the dummy case file to appeals and include the assessment documents or the petition information with the following noted on a routing slip attached to the file:

    "This is the dummy file of a non-petitioning spouse case. The petitioning spouse case file was sent to your office on (date). The non-petitioning spouse:
    a) Was assessed MFT 31. The assessment documents are enclosed.
    or
    b) Filed a petition, the information of which is enclosed.

    Petitioning spouse's name and TIN
    Non-Petitioning spouse's name and TIN"

4.8.9.25.8.1  (07-09-2013)
Split Spousal Assessments

  1. When only one spouse petitions and the IRS assesses the "same tax" against both the husband and the wife as separate assessments, MFT 31 procedures are used.

  2. When a joint return is ready to be closed to appeals, prepare a joint Form 5344. If the same tax will be assessed against both taxpayers, such as petitioning/non-petitioning cases, the deficiency should be entered in Item 18 on the joint Form 5344. Otherwise, enter the MFT 31 assessment amount in Item 35 when the case defaults. See IRM 4.4.12.4.45.5, MFT 31.

4.8.9.25.8.2  (07-09-2013)
Closing Related Returns

  1. See IRM 4.8.2.2.4, Multi-Year Examinations With at Least One Unagreed Year and One Agreed/No-Change Year, for procedures on sending agreed or no-change returns to appeals because they are related to unagreed cases being closed to appeals.

4.8.9.26  (07-09-2013)
Defaulted Notices

  1. It is the responsibility of Technical Services to take the necessary actions to ensure the assessment of the deficiency on any defaulted notice of deficiency is made within the statutory period for assessment. Any deviations from established guidelines must have group manager involvement.

  2. If the taxpayer does not petition the Tax Court or agree to the deficiency within 105 (165 if either the taxpayer is outside the United States when the notice is mailed or the notice is mailed to an address outside the United States) days, the case is considered to be defaulted and should be closed to CCP on the 105th day. The deficiency may be assessed immediately after the requisite number of days (105 or 165) have passed from the date of the issuance of the notice.

  3. Assessment of the deficiency on any defaulted case must be made within the statutory period. Per Treas. Reg. 301.6503(a)-1, the period of limitation on assessment and collection of any deficiency is suspended for 90 days after the mailing of a notice of such deficiency if the notice of deficiency is addressed to a person within the United States and the District of Columbia, or 150 days if such notice of deficiency is addressed to a person outside the United States and the District of Columbia (do not count Saturday, Sunday, or a legal holiday in the District of Columbia as the 90th or 150th day) plus an additional 60 days thereafter in either case.

  4. Confirm the ASED was properly updated when the notice of deficiency was initially issued. Refer to Exhibit 4.8.9-3 for computation of the correct ASED. If necessary, correct the ASED via Form 5348.

  5. Close out all controls and forward the defaulted case for closure.

4.8.9.26.1  (07-09-2013)
Defaulted Notices: Duplicate Notices Sent to Addresses Both Inside and Outside the United States

  1. When duplicate original notices of deficiency are sent to addresses both inside and outside of the United States and the Commissioner does not know the location of the taxpayer's residence on the date the notices are mailed, and the taxpayer does not file a petition within 90 days, a "protective" assessment of the deficiency will be made after 105 days (90 +15). In such cases, all billing and collection activity should be suspended until the domestic-foreign address issue is resolved; e.g., the taxpayer agrees, files a petition within the 150 day period, or the notice defaults after 150 days. See Polo v. Commissioner, T.C. Memo. 1991–16.

  2. Area counsel should be consulted in all cases where there is doubt about whether the 90 or 150 day period for filing a Tax Court petition may apply.

4.8.9.27  (07-09-2013)
Notice of Deficiency Involving a Non-Extending Spouse

  1. A notice of deficiency will be issued to a non-extending spouse in situations when one of the spouses will not consent to extend the assessment statute of limitations:

    1. A spouse cannot be located to secure a statute extension, or

    2. A spouse refuses to sign a statute extension.

  2. The examiner will prepare a duplicate file for the non-extending spouse.

    1. The duplicate file should contain all information required to issue the notice of deficiency, including a copy of the joint return and workpapers.

    2. The case file will be flagged as follows:

      "Notice of Deficiency on Non-Extending Spouse—Duplicate File"

    3. The transmittal letter for the non-extending spouse should reflect the status and statute date for the extending spouse.

    4. The notice of deficiency will be issued in the non-extending spouse's name only. The reviewer will forward a copy of the notice of deficiency to the examiner of the extending spouse.

4.8.9.27.1  (07-09-2013)
Non-Extending Spouse Petitions

  1. If the non-extending spouse petitions the Tax Court, the case file will be forwarded to appeals.

4.8.9.27.2  (07-09-2013)
Non-Extending Spouse Defaults

  1. If the non-extending spouse defaults on the notice of deficiency, an assessment will be made for the non-extending spouse using MFT 31 procedures.

4.8.9.27.3  (07-09-2013)
Closure of Extending Spouse

  1. Any deficiency assessed for the extending spouse must be made using MFT 31. The extending spouse can separately request an appeals hearing.

4.8.9.28  (07-09-2013)
Rescinding Notices Of Deficiency

  1. Per IRC 6212(d), the Secretary may, with the consent of the taxpayer, rescind any notice of deficiency mailed to the taxpayer. Whether or not a notice is rescinded is discretionary on the part of the Secretary. A notice of deficiency may only be rescinded with the consent of both the IRS and the taxpayer.

  2. Either the taxpayer or the IRS may initiate a rescission of a notice.

  3. Rev. Proc. 98-54, 1998-2 C.B. 531 provides taxpayers with instructions for entering into an agreement with the IRS under IRC 6212(d) to rescind a notice of deficiency.

  4. If the IRS does not agree that the notice of deficiency should be rescinded, the taxpayer will be notified in writing and the notice of deficiency will remain in effect. If the taxpayer wishes to file a petition with the Tax Court, the taxpayer must file the petition within the applicable 90 day or 150 day restriction period, which may not be extended.

4.8.9.28.1  (07-09-2013)
Criteria for Rescinding

  1. The determination to rescind a notice of deficiency is made on a case-by-case basis. A rescission may be agreed to if the following:

    1. A notice of deficiency has been issued for an incorrect amount. The taxpayer must be advised that, once rescinded, another notice may be issued, which may be for a greater amount.

    2. The notice was issued to the wrong taxpayer.

    3. The notice was issued for the wrong tax period.

    4. The notice was issued without considering a properly filed Form 872Consent to Extend the Time to Assess Tax, or Form 872-A, Special Consent to Extend the Time to Assess Tax.

    5. The taxpayer submits information establishing the actual tax due is less than the amount shown in the notice. Rescission is generally unnecessary in such cases because supplemental deficiency procedures can be used to resolve the case within the time allowed to file a petition with the Tax Court. See IRM 4.8.9.23.2, Additional Information and Reconsideration Requests. However, rescission may be considered on a case-by-case basis. For example, if the information submitted results in no change to the taxpayer's return, the taxpayer may still wish to rescind the notice of deficiency to preserve the right of Tax Court appeal in the unlikely event the case is reopened.

    6. The taxpayer requests a conference with the appropriate appeals office. However, the notice may be rescinded only if the appeals office first decides that the case is susceptible to agreement.

4.8.9.28.2  (07-09-2013)
Statute of Limitations Considerations Before Rescinding Notice

  1. Under IRC 6212(d), a rescission of a notice of deficiency does not affect the suspension of the running of any period of limitations during the period during which the notice of deficiency was outstanding. For example, assume that six months remain on the statute of limitations with respect to a return when the IRS issued a notice of deficiency. The issuance of the notice of deficiency suspends the statute of limitations. If the IRS and the taxpayer agree to rescind the statutory notice, then as of the date the notice is rescinded, the statute of limitations again begins to run and (in this example) six months remain until the statute expires.

  2. Since the rescission agreement returns the case back to its original state before the notice was issued, careful consideration must be given to the statute before such agreement is executed.

  3. Since a valid notice that has been rescinded suspends the running of the statute of limitations only for the period during which the notice is outstanding, a new statute date must be determined for purposes of issuing another notice of deficiency, if necessary, and making assessments.

  4. If there are at least ninety days remaining on the normal statute, a rescission may be entered into. If less than ninety days remains on the normal statute, the notice will be rescinded only if the taxpayer(s) executes a Form 872–A or Form 872–A to extend the statute. The Form 872 or Form 872–A must be executed by both the taxpayer(s) and the IRS prior to rescission.

  5. If there was a Form 872–A on the case prior to the issuance of the notice of deficiency, the rescission will not be granted unless the taxpayer signs another Form 872–A prior to rescission.

4.8.9.28.3  (07-09-2013)
Other Considerations Before Rescinding

  1. A rescission will not be entered into if the following:

    1. On the date of the rescission, 90 days or less would remain before the expiration date of the period of limitations on assessment. However, a notice of deficiency may be rescinded if, before the rescission, the taxpayer and the IRS execute a consent to extend the period of limitations on Form 872 or Form 872–A.

    2. The 90 day or 150 day restriction period during which the taxpayer may file a petition with the Tax Court has expired without the taxpayer filing a petition.

    3. The taxpayer has filed a petition the Tax Court.

    4. Before the notice of deficiency was issued, the taxpayer and the IRS executed a Form 872–A covering any of the tax periods in the notice of deficiency. A notice of deficiency may be rescinded in this situation, however, if the IRS executes a new Form 872–A covering the same tax periods as the earlier Form 872–A.

4.8.9.28.4  (07-09-2013)
Authority for Agreement to Rescind

  1. Area directors and other delegated officials, as noted in Delegation Order 4-8 in IRM 1.2.43.9, are authorized to execute a rescission agreement on behalf of the Commissioner. As it applies to Technical Services, Delegation Order 4-8 reflects that the authority to execute a rescission agreement on behalf of the Commissioner is delegated to Technical Services group manager. This authority may not be re-delegated below the group manager level.

  2. The authority to rescind does not apply to notices of final partnership administrative adjustment (FPAA).

4.8.9.28.5  (07-09-2013)
Precautions When Rescinding

  1. The following information should be carefully checked.

    1. If the notice of deficiency was issued to both a husband and wife, the rescission agreement must be signed by both spouses or authorized representative(s) for the parties. 

    2. The rescission agreement must cover the same tax periods as the notice of deficiency.

    3. The rescission agreement must reflect the same tax deficiency and penalties as the notice of deficiency.

4.8.9.28.6  (07-09-2013)
Agreement to Rescind Notice of Deficiency

  1. Form 8626, Agreement to Rescind Notice of Deficiency, is used to secure an agreement between the taxpayer and the government to rescind a notice of deficiency. The notice of deficiency reviewer is responsible for the control, preparation, and execution of the form.

  2. Form 8626 is prepared in duplicate. Once executed by both the taxpayer and the Technical Services group manager, one copy of the form is attached to the front of the notice of deficiency. If more than one notice was issued, a photocopy is attached to each of the additional notices. An executed copy of the Form 8626 is also sent to the taxpayer for his/her records.

  3. More than one year may be entered on the rescission agreement form. The agreement must contain all taxable years covered in the notice of deficiency. All tax years covered will be entered below the first paragraph under "Tax Year Ended."

  4. The rescission agreement is effective on the date the Commissioner or delegate countersigns the Form 8626.

4.8.9.28.6.1  (07-09-2013)
Rescission Document

  1. Although the use of Form 8626 is preferred to rescind a notice of deficiency, a document that reflects the agreement between the IRS and the taxpayer may be used in place of the Form 8626. In order to be effective, the document must contain the following:

    1. A statement that the taxpayer and the Commissioner or delegate agree to rescind the notice.

    2. Identification of the notice of deficiency, including the date the notice was issued, the type of tax, the tax period(s), and the amount(s) of the deficiency and any penalties.

    3. Representations that the period of limitations on assessment has not expired and that the taxpayers have not petitioned the Tax Court.

    4. An agreement that the effect of the rescission is to return the parties to the rights and obligations that existed immediately before the issuance of the rescinded notice of deficiency. This includes the right of the IRS to issue another notice of deficiency for any amount and the right of the taxpayer to appeal to the Tax Court.

    5. The signatures (on the same document) of the taxpayer (or the taxpayer's representative) and the Commissioner or delegate.

  2. A properly executed Form 8626 (or a document as provided in IRM 4.8.9.28.6.1 (1), Rescission Documents) is the only way that a notice of deficiency may be rescinded.

4.8.9.28.7  (07-09-2013)
Letters to be Used When Rescinding

  1. The following letters are used when considering a rescission:

    1. Letter 2264 (DO), Cover Letter for Rescission of Notice of Deficiency, is used to request the taxpayer's concurrence to rescind by signing Form 8626.

    2. Letter 2262 (DO), Cover Letter for Transmitting Signed Rescission, is used to send a copy of the executed rescission agreement to the taxpayer.

    3. Letter 2263 (DO), Exception Letter to Notice of Deficiency Rescission, is used to advise the taxpayer that the rescission is not being granted and the notice of deficiency will remain in effect.

4.8.9.28.8  (07-09-2013)
Correspondence Received Or Contact Made

  1. While corresponding with the taxpayer pending a rescission agreement, all correspondence should state,

    "There is no provision in the law for extending the 90 day period (or 150 day period if the notice was addressed to you outside the United States) in which you may file a petition with the Tax Court and nothing in this letter should be construed as such. The 90 or 150 day period in which you may file a petition with the Tax Court continues to run from the date set forth in the notice of deficiency."

4.8.9.29  (07-09-2013)
Control File Disposition

  1. Closed control files should be destroyed in accordance with IRM 1.15.23, Records Control Schedule for Tax Administration– Examination.

Exhibit 4.8.9-1 
Sample Exhibit for Use with Flow-Through Entities

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Exhibit 4.8.9-2 
Computation of Last Day to File a Petition With United States Tax Court and Computation of Default Date

Computation of Last Day to File a Petition With United States Tax Court

Description Julian Date Calendar Date
Notice of deficiency issued    
Plus 90/150 days for 90/150-day letter + +
Equals Last Day to File a Petition with Tax Court
========

========

Note:

Saturday, Sunday or a legal holiday in the District of Columbia is not counted as the last day.

Computation of Default Date

Description Julian Date Calendar Date
Notice of deficiency issued    
Plus 90/150 days for 90/150--day letter + +
Plus 15 days for Notification of Tax Court Petition + +
Equals Default Date ======== ========

Note:

Saturday, Sunday or a legal holiday in the District of Columbia is not counted as the last day.

Exhibit 4.8.9-3 
Assessment Statutes: Agreed Case Without Form 872–A Consent Agreed Case With Form 872–A Consent Defaulted 90-Day Letter Without Form 872–A Consent Defaulted 90-Day Letter With Form 872–A Consent

Agreed Case Without Form 872–A Consent: If the taxpayer agrees to the tax before the end of the 90 days, then the statute is extended by the number of days suspended plus 60 days.

Description Julian Date Calendar Date
Date Agreement is received 80 March 21
Minus date 90/150 day letter is issued − 15 January 15
Equals number of days suspended from assessing 65  
Plus 60 days to assess + 60 + 60
Equals number of days to add to original statute 125  
Julian date of original statute, including any Form 872 extension + 105 April 15
Julian date of corrected statute 230 August 18

Agreed Case With Form 872–A Consent: A notice of deficiency terminates Form 872–A. If the taxpayer agrees, the statute date is extended for 60 days from the agreement received date. This is allowed by law to process the assessment.

Description Julian Date Calendar Date
1. Date Agreement is received 194 July 13
2. Plus 60 days to assess + 60 + 60
3. Equals Extended ASED 254 September 11

Defaulted 90-Day Letter Without Form 872–A Consent: If the taxpayer does not petition Tax Court or agree to the deficiency by signing a waiver, then the case is closed as unagreed. The deficiency can then be assessed because the taxpayer has defaulted (i.e., has not responded to the notice of deficiency (90 or 150 Day Letter). The statute will be extended for the 90 or 150 days the case was suspended plus 60 days allowed by law to process the assessment.

Description Julian Date Calendar Date
Original statute date 105 April 15
Plus 90 (150) days for 90- day letter + 90 (or 150) + 90 (or 150)
Plus 60 days to assess + 60 + 60
Equals extended ASED 255 September 12

Defaulted 90-Day Letter With Form 872–A Consent: A notice of deficiency terminates Form 872–A. If the notice defaults, the statute date is extended for the 90/150 days the case was suspended plus 60 days allowed by law to process the assessment.

Description Julian Date Calendar Date
Date 90 (150) Day Letter issued 105 April 15
Plus 90 (150) days for 90- day letter + 90 (or 150) + 90 (or 150)
Plus 60 days to assess + 60 + 60
Equals extended ASED 255 September 12

Exhibit 4.8.9-4 
Accumulated Earnings Tax Sample Paragraphs

The following sample paragraphs may be used for the explanation of adjustments in accumulated earnings tax cases:

Statement Filed - Credit for Reasonable Needs

"It has been determined that your organization was formed or availed of so your shareholders could avoid income tax by permitting earnings and profits to accumulate instead of being divided or distributed during the taxable year (list tax year). Accordingly, the accumulated earnings tax provided by section 531 of the Internal Revenue Code is being asserted."

"In determining your accumulated earnings credit under section 535 of the Internal Revenue Code, consideration was given to the statement you filed dated (date of statement), in response to the notification sent to you by certified mail on (date of notification letter), as required by section 534(b) of the Internal Revenue Code. That part of your earnings and profits for the taxable year ended (insert date), which was retained for the reasonable needs of your business, was (amount of reasonable needs). In figuring your accumulated earnings tax, an accumulated earnings credit of (amount of credit) is allowed, as follows: (insert computation of credit)."

Statement Filed - Minimum Credit Allowed

"It has been determined that your organization was formed or availed of so your shareholders could avoid income tax by permitting earnings and profits to accumulate instead of being divided or distributed during the taxable year ended (tax year). Accordingly, the accumulated earnings tax provided by section 531 of the Internal Revenue Code is being asserted."

"In determining your accumulated earnings credit under section 535 of the Internal Revenue Code, consideration was given to the statement you filed dated (date of statement), in response to the notification sent to you by certified mail on (date of notification), as required by section 534(b) of the Internal Revenue Code."

"The information shown in your statement is not sufficient to establish that any part of your earnings and profits for the taxable year ended (insert date) was kept for reasonable needs of your business. Accordingly, the minimum accumulated earnings credit has been allowed and computed as follows: (insert computation of credit)."

No Statement Filed - Minimum Credit Allowed

"It has been determined that your organization was formed or availed of so your shareholders could avoid income tax by permitting earnings and profits to accumulate instead of being divided or distributed during the taxable year (tax year). Accordingly, the accumulated earnings tax as provided by section 531 of the Internal Revenue Code is being asserted."

"In figuring the accumulated earnings tax, the minimum accumulated earnings credit has been allowed and computed as follows: (insert computation of credit)."

"Notification was sent to you by certified mail on (date of notification) under section 534(b) of the Internal Revenue Code, but we have no record of a statement in response to the notification as allowed by section 534(c) of the Internal Revenue Code."

Exhibit 4.8.9-5 
FICA Tax Disclosure Statement

FOR INFORMATIONAL PURPOSES ONLY
The adjustment(s) to your income contained in this report has increased your FICA tax (social security tax plus Medicare tax) liability. Therefore, we have assessed (or will assess) the FICA tax and the applicable penalty in the amounts shown below.
A separate notification should have been (or will be) sent to you on the FICA tax and penalty assessment from the campus of the Internal Revenue Service.
Please note that the FICA tax and penalty assessments from the campus of the Internal Revenue Service are not part of the deficiency shown in the attached Notice of Deficiency and may not be contested in the Tax Court.
Unreported Tip Income subject to Social Security Tax $____  
Social Security Tax Rate x____  
Increase in Social Security Tax
  ____
Unreported Tip Income subject to Medicare Tax $____  
Medicare Tax Rate x____  
Increase in Medicare Tax
  +____
50% penalty for failure to report tips in accordance with section 6652(b) of the Internal Revenue Code   +____
Total Amount Due
  =____
If you wish to make a payment at this time, you must specify the amount of the payment that is for the FICA tax and/or the penalty.

Exhibit 4.8.9-6 
Prepayment Credit Adjustment



Prepayment Credit Adjustment
Statutory Deficiency   $___
Correct Amount of Prepayment Credits:  
 Federal Income Tax Withheld: $__  
 Estimated Tax Payments: $__  
Correct Prepayment Credit:
  $___
Prepayment Credits Claimed on Return:  
 Federal Income Tax Withheld: $__  
 Estimated Tax Payments: $__  
Total Prepayment Credits on Return:
  $___
Understatement of Prepayment Credits:
$___
Net additional tax (or net overpayment):
$___

Exhibit 4.8.9-7 
Innocent Spouse Allocation Worksheet

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Exhibit 4.8.9-8 
Innocent Spouse Allocation Worksheet Instructions

Understatement Worksheet Instructions
Allocating a Deficiency Under IRC 6015(d)
The allocation must be made according to the procedures contained in IRC 6015(d). The allocation takes into consideration limitations in IRC 6015(c). Allocation of a deficiency potentially results in an allocation between the spouses jointly and each spouse individually. If only one spouse elects relief the deficiency is allocated between the joint liability and the non-electing spouse individually. If both spouses elect relief the deficiency is potentially allocated between the joint liability and each spouse individually.
Steps to Allocate
Following is an seven-step approach to allocating understatements between the joint and several liability and each spouse individually. In general, items for which an electing spouse is granted relief are allocated from the joint liability to the non-electing spouse individually. Items for which relief is not granted remain part of the joint and several liability. Keep in mind that the allocation is for adjustments that created a deficiency, it is not an allocation of per return items. The seven steps are summarized below.
Step 1 – Determine the total deficiency.
This amount is shown on a transcript (IMFOLT or TAXMODA) as the TC 300 or TC 290. If the administrative file is available this is the amount shown as the Deficiency, which is prior to adjustments to prepayment credits, including any adjustments to earned income credit. Adjustments to prepayment credits are separately stated from the deficiency on a transcript.
Step 2 – Identify and allocate adjustments to separate treatment items.
Separate treatment items are (nonrefundable) credits and taxes only. They affect the deficiency dollar for dollar in the allocation computation. Common examples include;
•Child Care Credit
• Child Tax Credit
•Education Credits
• SE Tax
•Tax on
•IRA
Separate treatment items are separately allocated only when they are attributable to an individual spouse and the electing spouse has no actual knowledge of that item. In other words, separate treatment items remain a part of the joint and several liability unless they are attributable to the non-electing spouse and the electing spouse has no actual knowledge of that item. Refer to the spreadsheet to determine whether a particular separate treatment item is added to or subtracted from the total deficiency.
Step 3 – Compute the total allocable deficiency.
This is the joint deficiency (Step 1) adjusted for separate treatment items (Step 2). They must be backed out of the deficiency amount to arrive at “pure income tax”. This is because adjustments to credits and other taxes affect the deficiency dollar for dollar, while adjustments to taxable income affect based on the marginal tax rate. To mix adjustments to credits and other taxes with adjustments to taxable income is inappropriate
Step 4 – Allocate all adjustment items between the spouses.. The allocation takes into account the following items, discussed in further detail below: Actual knowledge bars relief for the item
•Fraudulent transfers invalidate election
•Taxpayer bears burden of proof for allocations
•Allocate as if spouses filed separate returns
•Ignore separate return limitations
• No relief for items attributable to requesting spouse
•Tax benefit limitation (Exception to the rule that per return items are not relevant in this computation).
•Relief reduced by fair market value of disqualified assets transferred
•IRS may allocate as appropriate when understatement due to fraud
•Adjustments to child's tax liability not included in computation
Step 5 – Compute the allocable deficiency for each spouse. This is the portion of the allocable deficiency (Step 3) allocable to each spouse using the ratio of the adjustment items allocated to the spouse (Step 4) over the total of all allocable adjustment items.
Deficiency Allocable to a spouse = Adjustments allocated to the spouse in Step 4 X Allocable Deficiency in Step 3
  Total adjustments Allocated in Step 4  
Step 6 – Compute the total deficiency allocable to each spouse: Deficiency allocable to spouse (Step 5) +/- Separate treatment tax items (Step 2) = Tentative total deficiency allocable to spouse
  Deficiency allocable to spouse (Step 5)
+/- Separate treatment tax items (Step 2)
 
  = Tentative total deficiency allocable to spouse  
In this step the tentative total deficiency is adjusted for the separate treatment items. They are adjusted in reverse (+/-) of the amount they appeared in step 2. Essentially they are removed from the total deficiency in step 2 and put back in at step 6.
The sum of the joint deficiency plus each spouse’s individual liability should equal the total deficiency before any allocation.
  Tentative total deficiency allocable to spouse (from above)
+ Adjustments that decreased earned income credit
- Adjustments that increased earned income credit
 
  = Total deficiency allocated to each spouse.  
In this step adjustment is made for any change to earned income credit. While earned income credit appears as a separate adjustment on a transcript, it is included in the legal definition of a "deficiency." Therefore it has been incorporated into step 7 in allocating the total "deficiency."
Step 7 – Consider exceptions and special rules.
These are the items outlined in step 4. Adjustment is made for items that affect the deficiency dollar for dollar such as disqualified transfers of assets or fraudulent intent.

Exhibit 4.8.9-9 
Sample Innocent Spouse Report- Page 1

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Exhibit 4.8.9-10 
Sample Innocent Spouse Report- Page 2

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Exhibit 4.8.9-11 
Sample Innocent Spouse - Waiver

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Exhibit 4.8.9-12 
Transferee and Fiduciary Letter Opening Paragraphs

Liability for transferor's unpaid original tax liability:

We will assess against you the amount of (amount of liability), plus interest as provided by law, constituting your liability as transferee of assets of (name of transferor), (transferor's address), for unpaid income tax due from (name of transferor), for the taxable year ended December 31, YYYY, as shown in the attached statement.

Liability for transferor's unpaid deficiency:

The determination of the income tax liability of (name of transferor), (transferor's address), for the taxable year ended December 31, YYYY, discloses a deficiency in the amount of (amount of liability), as shown in the attached statement. The amount of the deficiency, plus interest as provided by law, constitutes your liability as transferee of assets of (name of transferor), and will be assessed against you.

Unpaid deficiency of the transferor for one year in excess of an overpayment by the transferor for another year:

The determination of the income tax liability of (name of transferor), (transferor's address), for the taxable years ended December 31, YYYY and December 31, YYYY, discloses a deficiency in the amount of (amount of liability) for the taxable year ended December 31, YYYY, and an overassessment for the taxable year ended December 31, YYYY, as shown in the attached statement. The amount of the deficiency, plus interest as provided by law, constitutes your liability as transferee of assets of (name of transferor), and will be assessed against you. The overassessment, to the extent that it represents an overpayment of tax, will be refunded or credited as provided by law.

Value of the assets received by the transferee is less than the unpaid deficiency of the transferor:

The determination of the income tax liability of (name of transferor), (transferor's address), for the taxable year ended December 31, YYYY, discloses a deficiency in the amount of (amount of liability) as shown in the attached statement. (Amount of liability to be assessed) of the amount of the income tax deficiency, plus interest as provided by law, will be assessed against you as transferee of assets of (name of transferor).

Transferee of a transferee with respect to their liabilities for an unpaid deficiency of the transferor:

The determination of the income tax liability of (transferor), (address), for the taxable year ended ---, discloses a deficiency in the amount of $---, as shown in the attached statement. The amount of the deficiency, plus interest as provided by law, constitutes your liability as transferee of assets of (first transferee), transferee of assets of (transferor), and will be assessed against you.

Fiduciary with respect to personal liability under IRC 6901 and 31 U.S.C. 3713(b) by reason of the fiduciary having paid any debt or distributed assets without first having satisfied the tax due from the estate:

Income Tax


The determination of the income tax liability of (name of taxpayer), (taxpayer's address), for the taxable year ended December 31, YYYY, discloses a deficiency in the amount of (amount of liability), as shown in the attached statement. This amount, plus interest as provided by law, constitutes your personal liability under 31 U.S.C. 3713(b), as amended, as fiduciary of (name of taxpayer), and will be assessed against you.


Estate Tax


We have determined an assessment against you in the amount of (amount of liability), plus interest as provided by law, which constitutes your personal liability under 31 U.S.C. 3713(b), as a fiduciary, for estate tax due from the estate of (name of estate), (estate address), as shown in the attached statement.


Gift Tax


We have determined an assessment against you in the amount of (amount of liability), plus interest as provided by law, which constitutes your personal liability under 31 U.S.C. 3713(b), as a fiduciary, for gift tax due from (name of taxpayer), deceased, for the calendar year(s) December 31, YYYY, as shown in the attached statement.

Decedent's estate when it is proposed to hold the estate liable for the payment of a deficiency due from a corporation of which the decedent was a transferee during his/her lifetime.

During his/her lifetime, (name of decedent), deceased, (decedent's address), incurred an income tax liability in the amount of (amount of liability), as transferee of assets of (name of transferor), (transferor's address), for the taxable year ended December 31, YYYY, as shown in the attached statement. This amount, plus interest as provided by law, will be assessed against the estate of the decedent.

Trustees of a decedent's estate if the duly qualified executors or administrators have been discharged and they or others are appointed trustees, and it is necessary to issue a transferee letter to the trustees:

The determination of the income tax liability of (name of taxpayer), deceased, (or the estate of decedent's name), (address), for the taxable year ended December 31, YYYY, discloses a deficiency in the amount of (amount of liability), as shown in the attached statement. This amount, plus interest as provided by law, will be assessed against you as transferee of assets of the estate of the decedent.

Transferee of gift tax:

We have determined an assessment against you in the amount of (amount of liability), plus interest as provided by law, which constitutes your liability as a transferee of property of (name of transferor), (transferor's address), for gift tax for the calendar year(s) as shown in the attached statement.

Transferee of estate tax:

We have determined an assessment against you in the amount of (amount of liability), plus interest as provided by law, which constitutes your liability as a transferee of property of the estate of (name of deceased), (deceased's address), for estate tax, as shown in the attached statement.

Transferee, trustee, and/or insurance beneficiary of estate tax:

We have determined an assessment against you in the amount of (amount of liability), plus interest as provided by law, which constitutes your liability as transferee, trustee, and/or beneficiary of property of the estate of (name of deceased), (deceased's address), for estate tax, as shown in the attached statement.

Note:

"Trustee" is to be used pursuant to IRC 6324 and IRC 6901 if the property is included in the gross estate under IRCs 2035, 2036, 2037, 2038, 2040, 2041, or 2042. "Trustee" and/or "beneficiary" should be omitted if inapplicable. Such notice should be issued within the 3 year period under IRC 6501.

Exhibit 4.8.9-13 
Transferee Statements Attached to Letters

Transferee of assets of a corporation:


STATEMENT
(Name of transferor), Transferor
TIN:
(Address)
Tax liability for the taxable year ended____.
(Name of transferee), Transferee
TIN:
(Address)
It has been determined that (name of transferor), (address), has been dissolved and that assets (identify assets and date(s) of transfer) were transferred to you on or about (date).
The above amounts are your liability as a transferee of assets of (name of transferor) for a deficiency of income tax due from (name of transferor) for the taxable year shown above.

Transferee of assets of an estate:

STATEMENT
Estate of (name of decedent), Deceased, Transferor
TIN:
(Address)
Tax liability for the taxable year ended____.
(Name of transferee), Transferee
TIN:
(Address)
It has been determined that assets (identify assets) of the above named decedent's estate were transferred to you on or about (date).
The above amounts is your liability as a transferee of assets of the estate of (name of decedent) for a deficiency in income tax due from his estate for the taxable year shown above.

Decedent's estate for the liability of the decedent incurred prior to date of death as a transferee of the assets of a corporation, estate, or other transferee:

STATEMENT
(Name of transferor), Transferor
TIN:
(Address)
Tax liability for the taxable year ended____.
(Name of decedent), Deceased, Tranferee
TIN:
(Address)
(Name of administrator), Administrator
(Address)
It has been determined that (name of transferor), (address), has been dissolved, that assets were transferred to (name of decent) on or about (date), and that payment of an income tax deficiency in the amount of $--- for the taxable year shown above is due from the corporation.
The above amount represents the liability of the estate of (name of decedent) for payment of the deficiency due from (name of transferor), which liability was incurred by (name of decedent) during his lifetime as a transferee of assets of said corporation.

Transferee of a transferee of assets of a corporation, estate or other transferor:

STATEMENT
(Name of transferor), Transferor
TIN:
(Address)
Tax liability for the taxable year ended____.
(Name of transferee), Transferee
TIN:
(Address)
It has been determined that (name of transferor), (address) has been dissolved, that assets were transferred to (name of first transferee) on or about (date), and that (name of first transferee) has been dissolved and its assets were transferred to you on or about (date).
The above amount is your liability as a transferee of assets of the (name of first transferee), (address), transferee of assets of the (name of transferor), (address), for an income tax deficiency due from (name of transferor) for the taxable year shown above.
NOTE: If the estate or other taxpayer is a transferor, the above paragraphs should be changed to cover the facts in that particular case.

Trustees of a decedent's estate where the duty qualified executors or administrators have been discharged and they or others have been appointed trustees:

STATEMENT
Estate of (name of decedent), Deceased, Transferor
TIN:
(Address)
Tax liability for the taxable year ended____.
Estate of (name of decedent), Deceased, Transferee
(Names of trustee(s)), Trustee(s)
(Address)
The records of this office show that (name(s) of trustee(s)) were the qualified (executor and/or executrix and/or administrator) of the estate of (name of decedent), Deceased, until he, she, or they were discharged as such on (date) and that they have been since that time and are now the trustees of the estate.
The above amount represents the liability of the trust created under the will of (name f decedent), as transferee of assets of his/her estate, for a deficiency of income tax due from him or her (or his or her estate) for the taxable year shown.

Fiduciary who has incurred personal liability for payment of the tax of an estate under 31 U.S.C. 3713(b) through failure to observe the priority of the United States:

STATEMENT
Estate of (name of decedent), Deceased
TIN:
(Address)
Tax liability for the taxable year ended____.
(Name of fiduciary)
TIN:
(Address)
The records of this office show that you were served with proof(s) of claim by the United States on (date(s)). the records of the (name of the court), (address) show that the estate of (name of decedent), Deceased, was closed on (date), and that certain debts were paid or distribution of the assets was made without first satisfying the tax due to the United States from the estate.
The above amount is your personal liability under 31 U.S.C 3713(b), as amended, for a deficiency of income tax due from the estate of (name of decedent) for the taxable year shown above.

Estate tax letter to a transferee of property received from an estate after decedent's death:

STATEMENT
Estate of (name of decedent), Deceased, Transferor
TIN:
(Address)
(Name of transferee), Transferee
TIN:
(Address)
Tax liability for the taxable year ended____.
(Name of transferee), Transferee
TIN:
(Address)
It has been determined that property of the estate of (name of decedent), Deceased, was transferred to you on or about (date). The liability of the estate for estate tax has not been discharged. the above amount is your liability as a transferee of property of that estate. Your liability does not exceed the value of the property you received.
The estate tax return filed by the executor (executrix or administrator) on Form 706 has been verified as filed except as follows: (show changes as in usual setup to the estate).

Estate tax letter addressed to a fiduciary who has incurred personal liability for payment of the estate tax of an estate under 31 U.S.C. 3713(b) through failure to observe the priority of the United States:

STATEMENT
Estate of (name of decedent), Deceased
TIN:
(Address)
(Name of fiduciary)
TIN:
(Address)
It has been determined that you have served as a fiduciary of the estate of the decedent named above, that the estate tax liability of the estate has not been discharged, and that you, as a fiduciary, paid a debt or debts, or distributed the estate in whole or in part without first discharging the estate tax liability.
Accordingly, under 31 U.S.C. 3713(b), you are personally liable for the undischarged estate tax to the extent of such payments and distributions. the above amount is your personal liability.
The estate tax return filed by the executor (executrix of administrator) on Form 706 has been verified as filed except as follows: (Use same setup as to estate).

Estate tax letter addressed to a transferee of property transferred by the decedent during his/her life, or insurance, powers of appointment and jointly owned property with right of survivorship:

STATEMENT
Estate of (name of transferee), Deceased, Transferor
TIN:
(Address)
(Name of trustee or beneficiary), Trustee and Transferee, or (Insurance Beneficiary and Transferee) or (Trustee, Insurance Beneficiary and Transferee)
TIN:
(Address)
It has been determined that property included in the gross estate of the decedent named above for the purpose of estate tax was transferred to or received by you on or about (date), and that the liability of the estate for estate tax has not been discharged.
The above amount is your liability as transferee and trustee of property under a trust created by the decedent on (date), of which you are trustee. the amount of your liability does not exceed the value of the property you received.
OR
The above amount is your liability as transferee and trustee of insurance upon the life of (name of decedent), Deceased, the policy (or policies) numbered ---- having been issued by your company. The proceeds of the insurance are being held in whole or in part by your company and the income (or the income and part of the principal is being paid to a designated beneficiary (beneficiaries)). The amount of your liability does not exceed the amount of the insurance.
OR
The above amount is your liability as a transferee of property from the decedent during his lifetime on or about (date or dates) and also from the estate at or after his death. The amount of your liability does not exceed the value of the property you received.
The estate tax return filed by the executor (executrix or administrator) on Form 706 has been verified as filed except as follows: (show changes as in usual setup to the estate).
Note: Combinations and variations of the above statement may be necessary. Each one should be worded to cover the particular case, care being exercised to combine with "transferee" the appropriate term "trustee" or "insurance beneficiary" or both.

Gift tax letter addressed to a transferee of property from an individual as a gift:

STATEMENT
(Name of donor), Donor
TIN:
(Address)
(Name of transferee), Transferee
TIN:
(Address)
It has been determined that on or about (date or dates) (name of donor) transferred property to you as a gift (or gifts), and that the gift tax liability has not been discharged. The above amount is your liability as a transferee of the property you received.
The gift tax return by the donor (executor) on Form 709 has been verified as filed except as follows: (Show usual setup). (Use the calendar year when applicable).

Gift tax letter addressed to a fiduciary who has incurred personal liability for payment of the gift tax of a deceased donor under 31 U.S.C. 3713(b), through failure to observe the priority of the United States:

STATEMENT
Estate of (name of decedent), Deceased
TIN:
(Address)
(Name of fiduciary)
TIN:
(Address)
It has been determined that you have served as executor (or administrator) of the estate of (name of decedent). At the time of his death, he or she was indebted to the united States for gift tax upon the transfer of certain property as a gift (or gifts). It also appears that you, as fiduciary, paid a debt or debts of the decedent or distributed the estate in whole or in part without first discharging the gift tax liability. Accordingly, under 31 U.S.C. 3713(b), as amended, you are personally liable for the undischarged gift tax to the extent of such payments and distributions. the above amount is your personal liability.
The gift tax return by the donor(executor) on Form 709 has been verified as filed except as follows: (Use same setup as to donor.) (Use the calendar year when applicable.)

Gift tax letter addressed to trustee as transferee of property received from an individual as a gift in trust for the benefit of others:

STATEMENT
(Name of donor), Donor
TIN:
(Address)
(Name of trustee and transferee), Trustee and Transferee
TIN:
(Address)
It has been determined that on or about (date or dates) (name of donor) transferred property to you as gifts under a trust (or trusts) (dated) for the benefit of a certain person(s) named therein, and that the gift tax liability has not been discharged. The above amount is your liability as trustee and transferee of the property you received.
The gift tax return by the donor (executor) on Form 709 has been verified as filed except as follows: (Show same setup as to donor.) (Use the calendar year when applicable.)


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