4.10.26  Net Rate Netting Procedures for LB&I Cases

Manual Transmittal

August 27, 2012

Purpose

(1) This transmits revised IRM 4.10.26, Examination of Returns, Net Rate Netting Procedures for LB&I Cases.

Background

Internal Revenue Code 6621(d) was enacted by RRA '98 and provides for the equalization/elimination of the interest rate differential between overpayments and underpayments of two or more tax years for the "same" taxpayer during overlapping periods. The effect of the rate equalization results in the interest rate differential being netted to "zero" . The IRS calls this procedure "net rate netting" . See IRM 20.2.14.6 for more information.

Material Changes

(1) Reflects change from Large Mid-Size Business (LMSB) to Large Business and International (LB&I).

(2) Reflects change from using the term "examiner" to "field examiner" .

(3) Reflects changes incorporating SBSE-20-1111-053, Interim Guidance: Treatment of Net Rate Netting (NRN) Requests.

(4) IRM 4.10.26.1 – editorial changes were made to incorporate IRM 20.2.14.1(4).

(5) IRM 4.10.26.2 – editorial changes were made to incorporate SBSE-20-1111-053, Interim Guidance.

(6) IRM 4.10.26.3 – editorial changes and corrections were made.

(7) IRM 4.10.26.4 - editorial changes were made to incorporate SBSE-20-1111-053, Interim Guidance.

(8) IRM 4.10.26.5 - editorial changes were made to incorporate SBSE-20-1111-053, Interim Guidance.

(9) IRM 4.10.26.6 – editorial changes were made to incorporate SBSE-20-1111-053, Interim Guidance.

(10) IRM 4.10.26.7 - editorial changes were made to incorporate SBSE-20-1111-053, Interim Guidance.

(11) IRM 4.10.26.8 - editorial changes were made to incorporate SBSE-20-1111-053, Interim Guidance.

Effect on Other Documents

This IRM supersedes IRM 4.10.26 dated May 23, 2008.

Audience

All field examiners in LB&I and their managers will use this IRM.

Effective Date

(08-27-2012)

Sunita Lough
Acting Director, Pre-Filing and Technical Guidance
Large Business and International Division

4.10.26.1  (08-27-2012)
Overview

  1. This section provides guidance to field examiners who receive formal or informal requests for Net Rate Netting (NRN). The purpose of this guidance is to ensure that LB&I team members properly handle cases with NRN requests so that case processing functions in SB/SE or Appeals can properly compute interest after the case is closed. These procedures do not apply to NRN requests worked in case processing units.

  2. NRN is authorized by IRC 6621(d). IRC 6621(d) provides for the equalization/elimination of the interest rate differential between overpayments and underpayments of two or more tax years for the "same" taxpayer during overlapping periods. The effect of the rate equalization results in the interest rate differential being netted to "zero" . The IRS calls this procedure "net rate interest netting" . See IRM 20.2.14.6 for more information.

  3. Procedures for computing NRN are located in IRM 20.2.14.

  4. This section distinguishes NRN requests from formal claims. NRN requests will not be subject to formal claims procedures during examination consideration.

4.10.26.2  (08-27-2012)
Discussing Net Rate Netting with Taxpayers

  1. Field examiners are more likely to encounter NRN requests in cases with complex returns than in cases with less complex returns.

  2. In such cases, the field examiner will determine if it is beneficial to discuss NRN with the taxpayer during the planning stage of the examination. If so, such discussions will clarify the following points:

    1. NRN is performed after offsetting.

    2. NRN is frequently confused with interest offsetting. See IRM 4.10.26.3 for more information.

    3. Offsetting can occur when there is an outstanding overpayment and underpayment for which interest is allowed or charged over the same period of time between two or more different tax years.

      Example:

      An example of Offsetting would be an overpayment of tax exists in one year and an underpayment of tax exists in another year. Offsets can occur between tax years of the "same" or different taxpayers.

    4. NRN can occur when there is an overpayment(s) and underpayment(s) where interest will be/has been allowed or charged during the same time period. Interest being allowed or charged during the same time period, is referred to as an "overlapping period" . The overlapping periods for overpayment(s) and underpayment(s) can be for different tax years or different tax modules for the "same" taxpayer.

      Example:

      An example of NRN with a different tax module would be an overpayment of employment tax and an underpayment of income tax exists where overpayment and underpayment interest is being allowed or charged during the same period of time for tax years belonging to the "same" taxpayer.

      Example:

      An example of NRN for different tax years when one module balance is zero would be an overpayment for 200512 of income tax occurred and was refunded to the taxpayer on October 15, 2006. Accordingly, the 200512 tax module balance is zero. In 2006, an examination of tax year 200412 resulted in additional tax owed by the "same" taxpayer. There was an overlapping period of overpayment interest for 200512 and underpayment interest for 200412 from the due date of the 200512 return until the October 15, 2006 refund date.

    5. Offsetting can be systematically performed by Master File or manually by the Campus after a case closes. Offsets between different taxpayers must be done manually.

      Note:

      Both NRN and Offsetting require special case processing instructions on Form 3198, Special Handling Notice for Examination Case Processing. See IRM 4.10.26.7 for specific instructions.

4.10.26.2.1  (08-27-2012)
Identification of Net Rate Netting Requests for Processing

  1. The Service will process any resolved tax period(s) in the NRN request and the information for any unresolved tax period(s) will be retained.

    1. A resolved tax period is where the overlapping underpayment and overpayment periods have been identified and the amounts have been determined and are no longer subject to controversy in Exam, Appeals, or a court.

    2. An unresolved tax period is where the overlapping underpayment and overpayment periods and amounts have not been determined because they are in Exam, Appeals or the taxpayer is pursuing litigation.

      Note:

      The taxpayer may decide to remove any or all tax period(s) from the request up until the point of time the request is processed.

  2. Because of the complexity surrounding NRN requests, the Service will not provide "payoff" estimates of the interest due or receivable from a NRN adjustment.

  3. The field examiner will consider any NRN request made during the examination process as outlined in IRM 4.10.26.4.3 below. Taxpayers will find instructions for filing a NRN request in Rev. Proc. 99-43, 1999-47 IRB 579 and/or Rev. Proc. 2000-26, 2000-24 IRB 1257.

  4. The field examiner will review the information provided by the taxpayer to determine whether the NRN information provided is accurate and sufficient to process (perfected NRN request). It is to the taxpayer’s advantage to prepare an accurate request. The taxpayer should specify all overlapping underpayment and overpayment periods and attest whether any of the periods have been previously used for NRN purposes.

    Note:

    If any overlapping period was previously used for net rate netting, the taxpayer should attach the prior net rate netting interest computation to the current NRN request. This will assist campus personnel in the processing of the NRN request.

  5. A NRN request may not be a refund claim for the purposes of IRC 7422. However, a NRN request with payment of the interest is a refund claim. If the taxpayer is making a claim for refund, the interest must first be fully paid. See IRM 25.6.1.10.2.6, Claims for Credit or Refund – Form and Content.

  6. Field examiners will not disallow a NRN request using the formal claims disallowance process. Instead, they will return any imperfect request to the taxpayer with a Letter 4129 explaining the reasons. See IRM 4.10.26.6 for further instructions.

  7. Pursuant to IRC 7422, taxpayers who have fully paid the related interest amounts may file a claim for refund and receive judicial review by a United States District Court or Court of Federal Claims, if the accounts involved are first paid in full. Flora v. United States, 362 U.S. 145 (1960).

4.10.26.3  (08-27-2012)
Offsetting Distinguished from Net Rate Netting

  1. NRN is not the same as offsetting between tax years. IRC 6621 (d) provides for the equalization/elimination of the interest rate differential between overpayments and underpayments of two or more tax years for the "same" taxpayer during overlapping periods so the interest rate differential is netted to zero. See IRM 20.2.14.6 for more information. The taxpayer must provide a written request for NRN. Use NRN in the following situations at the taxpayer’s request:

    1. An examination underpayment that overlaps with previously refunded overpayment(s) on different year(s) or different tax module(s).

    2. An examination overpayment that overlaps with previously paid tax assessment(s) on different year(s) or different tax module(s).

  2. Offsetting is transferring credit from an overpaid tax module to an underpaid tax module. The Service generally offsets unsettled modules, through Master File programming or manually performed by processing personnel. An unsettled module is a module with either a credit (refund due taxpayer) or debit (taxpayer owes) balance. See IRC 6402 (a) and IRM 20.2.5.13, Debit Interest on Liabilities Paid by Offset.

  3. Offsetting is done before any NRN adjustments. The following are examples of offsets that will be done before processing a NRN request:

    1. Overpayment(s) and underpayment(s) closing during the same time

    2. Overpayment(s) closing with an outstanding underpayment(s) on different tax year(s).

    3. Underpayment(s) closing with current overpayment(s) on a different tax year(s).

  4. If a taxpayer requests a "net" balance during an examination, it may be a request for either "offsetting" or "net rate netting." To determine which it is, review a current transcript of the account.

    Example:

    An example of Offsetting when the current balance on year(s) is zero. There is an assessment shown by TC 300 on TXMOD 02 199612 and allowing TC 301 on TXMOD 02 199912. The overpayment on 199912 should be applied to the balance owing on 199612 to prevent the taxpayer having to file a NRN request.

    Example:

    An example of NRN, the transcript shows an assessment for TC 300 on TXMOD 02 199612. The taxpayer informs the Internal Revenue Service that he/she received a refund from TXMOD 10 199612 and wants the interest on the current adjustment netted. An overlapping interest period occurred between an overpayment (that was refunded or offset with interest) and an underpayment that was previously assessed or paid so it is appropriate to consider Net Rate Netting. IRM 20.2.14 provides information on Netting of Overpayment and Underpayment Interest and Offset Methodology.

4.10.26.4  (08-27-2012)
Receiving a Request(s) for Net Rate Netting

  1. Request(s) for Net Rate Netting may be received by either the campus or the field examiner.

  2. When the campus receives a NRN request, the campus will follow the procedures in IRM 20.2.14 (outlined below in IRM 4.10.26.4.1 and IRM 4.10.26.4.2).

  3. When the field examiner receives a NRN request during an examination, the field examiner will follow the procedures in IRM 4.10.26.4.3 below.

4.10.26.4.1  (08-27-2012)
A Request(s) for Net Rate Netting Received by the Campus

  1. When the campus receives a NRN request on a Form 843, Claim for Refund and Request for Abatement, or written statement from the taxpayer, the AM Complex Interest Team receiving the request will check to determine if there is any Examination or Appeals activity on any of the tax periods identified in the NRN request.

  2. If there is an "L" freeze and the AIMS Status Code is 9 through 79 for any of the NRN request tax periods, AM Complex Interest Team will forward the entire NRN request to the Centralized Case Processing (CCP) function at the Ogden Campus using Form 3210, Document Transmittal. The AM Complex Interest Team will issue a letter of transfer to the taxpayer.

4.10.26.4.2  (08-27-2012)
A Request(s) for Net Rate Netting Received by CCP

  1. When a NRN request is received by CCP at the Ogden Campus, that function will review the NRN request to determine if the NRN request can be processed, or whether it has unresolved periods.

  2. CCP will determine if there is an open exam on the tax periods involved.

  3. CCP will contact the Field Examination team when an open exam exists to explain that the resolved periods will be processed, as soon as possible. CCP will forward a copy of the NRN request with unresolved periods to Field Exam, if necessary. Field Exam will follow the procedures in IRM 4.10.26 for the unresolved periods.

  4. The original received date stamp will not apply to unresolved periods.

    Note:

    For NRN request(s) received by CCP and forwarded to the field for consideration, the field examiner will review the NRN request , see IRM 4.10.26.7 for specific instructions.

4.10.26.4.3  (08-27-2012)
A Request(s) for Net Rate Netting Received by Field Examiners

  1. When the field examiner receives a NRN request, the field examiner will do the following:

    1. If necessary, instruct the taxpayer to provide a revised NRN request with all the required information as provided in Rev. Proc. 99-43 or Rev. Proc. 2000-26. Oral requests will not be considered. The taxpayer must provide the request in writing.

    2. Date stamp the NRN request.

    3. Provide Letter 4126, Acknowledgement of Net Rate Netting Request to the taxpayer. See IRM 4.10.26.8.1 for specific instructions.

    4. Add the NRN request to the examination plan. Risk analysis factors will not apply. The NRN request(s) may not be surveyed or excluded from the Examination Plan.

    5. Determine if the NRN request involves more than one TIN, see IRM 4.10.26.5 for further instructions.

    6. Determine whether the request is perfected containing the required information to process the NRN request. See IRM 4.10.26.8.2(1) below.

    7. Document all activity and appropriately index all workpapers related to a NRN request.

    8. Forward all perfected NRN requests to CCP using a Form 3198, Special Handling Notice for Examination Case Processing, unless it is determined that the case will close agreed in 90 days or less. If the case will close in 90 days or less, the field examiner will hold the NRN request and close it with the administrative file at the conclusion of the examination, see IRM 4.10.26.7 for specific instructions.

4.10.26.5  (08-27-2012)
Reviewing Net Rate Netting Requests Involving More than One Taxpayer Identification Number (TIN)

  1. The field examiner must review the NRN request to determine whether the request includes more than one TIN. (A net rate adjustment cannot be made between different taxpayers.) If so, the field examiner must make a determination whether the TINs are the "same" taxpayer for purposes of IRC 6621(d) and whether IRC 6621(d) applies.

    Note:

    If an office examiner receives a request for NRN that involves more than one TIN, the case should be transferred to a field group. The reason(s) for the transfer should be prominently displayed on the buck slip or transfer document.

  2. The field examiner must determine whether the required information is present on the NRN request. See IRM 20.2.14.6.1.1(5) and Rev. Proc. 2000-26.

  3. The NRN request may not be surveyed or excluded from an examination plan. Risk analysis factors will not apply.

  4. The field examiner will document all activity and appropriately index all workpapers related to a NRN request.

  5. The field examiner will ascertain the facts surrounding the relationships between TIN holders and analyze the facts in terms of applicable law.

    Note:

    It may be appropriate to consult with Counsel on this issue.

  6. If the field examiner determines that the multiple TINs are the "same taxpayer" for net rate netting purposes, the field examiner will take the following actions:

    1. Check "Net Rate Netting" under the "Special Interest Features" on the back of Form 3198, Special Handling Notice for Centralized Case Processing.

    2. Determine if the NRN request is sufficient for processing (perfected) – See IRM 4.10.26.8.2(1).

    3. Document the facts, law and conclusion in the workpapers used to determine "same taxpayer" .

    4. Document all activity and appropriately index all workpapers related to a NRN request.

    5. Inform the taxpayer that the resolved periods will be processed and the information for the unresolved periods will be retained. See IRM 4.10.26.2.1(1). If the NRN request is received within 90 days of closing an agreed case, inform the taxpayer the NRN request will be processed after closing.

    6. Notate any conclusions reached on the NRN request in the examination plan.

    7. Forward all perfected NRN requests (see IRM 4.10.26.5 and IRM 4.10.26.6) to CCP using a Form 3198, Special Handling Notice for Examination Case Processing, unless it is determined that the case will close agreed in 90 days or less. If the case will close agreed in 90 days or less, the field examiner will hold the NRN request and close it out with the administrative file at the conclusion of the examination. See IRM 4.10.26.7 for specific instructions.

    8. For any case sent to Appeals, indicate in Form 4665, Report Transmittal, that the NRN request involves the "same " taxpayer.

  7. If the field examiner determines that the multiple TINs are not the "same " taxpayer, the field examiner will take the following actions:

    1. If the NRN request is determined to be entirely from different taxpayers, mark through the date stamp on the request and initial it.

    2. Issue Letter 4128, Net Rate Netting Request Involving More than One TIN, to the taxpayer indicating the Service is unable to process the request. See IRM 4.10.26.8.3 for specific instructions.

    3. If the field examiner concludes that any tax period(s) for the taxpayer who submitted the request are subject to netting, he or she may indicate the periods on the letter. However, information related to other taxpayers may not be disclosed.

    4. If the field examiner determines that any portion of the request should be denied because the multiple TINs are not the "same" taxpayer, the taxpayer has the right to elevate the issue to Appeals.

  8. If there are other issues that require Appeals consideration, the field examiner should notate the NRN request on Form 4665, Report Transmittal, and explain the facts and law surrounding the NRN issue.

    Example 1: Corporation A files a NRN request with multiple TINs. Corporation A has overpayments for periods 1, 2, and 3 and an underpayment for period 4. Subsidiary B has underpayments for periods 1, 2, 3, and 4. Subsidiary B joined the consolidated group at the beginning of period 2. Subsidiary B cannot net its underpayment with the overpayment of parent A for period 1, but the overpayments and underpayments of periods 2 and 3 can be netted.

    Example 2: Parent Corporation A files a NRN request for overlapping periods of underpayment and overpayment interest involving Corporation A and its subsidiaries B and C. These three entities have separate TINs. The IRS determines that Corporation A is not the same taxpayer as Corporations B and C for purposes of interest rate netting because Corporation A’s underpayment was incurred before Corporations B and C became members of a consolidated group with Corporation A as the parent. Therefore, Corporations B and C are not jointly liable with Corporation A for the income tax underpayment. However, the IRS determines that Corporation B can file a net rate request for its own underpayment of employment taxes and its own overpayment of excise taxes. Similarly, the IRS determines that Corporation C can file its own net rate request. The IRS will advise Parent Corporation A (the entity that filed the net rate request) that its request will not be approved, but that Corporations B and C should file their own requests for their own overlapping periods.

4.10.26.6  (08-27-2012)
Returning Imperfect Net Rate Netting Requests to Taxpayers

  1. An imperfect NRN request is one where the taxpayer has not provided adequate information as required by Rev. Proc. 2000-26 or Rev. Proc. 99-43. See IRM 4.10.26.8.2 (1) above. However, if the NRN request is imperfect due to unresolved tax period(s), it is not an imperfect request. See IRM 4.10.26.2.1(1) for the definition of an unresolved tax period.

  2. NRN requests are not refund claims for the purposes of IRC 7422. Accordingly, field examiners will not disallow a net rate request using the formal claim disallowance process. Instead, they will return any imperfect request to the taxpayer.

  3. Pursuant to IRC 7422, taxpayers may file a claim for refund and receive judicial review by a United States District Court or Court of Federal Claims if the accounts involved are first paid in full. See Flora v. United States, 362 U.S. 145 (1960).

  4. When a field examiner determines that a taxpayer’s net rate request does not possess the required information (see IRM 4.10.26.8.2 (1) below) or the information provided is not accurate:

    1. Cross out the date stamp on the original NRN request and initial it.

    2. Prepare Letter 4129, Return of Imperfect Net Rate Netting Request, to the taxpayer explaining the reasons for this decision.

    3. Maintain a copy of Letter 4129 and the original NRN request with the crossed-out date stamp and initials in the case file.

    4. Issue Letter 4129 to the taxpayer and enclose the original NRN request with the date stamp crossed out and initialed.

    Note:

    Neither Centralized Case Processing (CCP) nor the Appeals Complex Interest Team will consider any Net Rate Netting request where the field examiner has crossed out the received date.

  5. If the taxpayer later files a perfected request, the perfected request will be date-stamped and used to determine all applicable statute of limitations dates.

  6. The field examiner will document all activity and appropriately index all workpapers related to a NRN request.

  7. The field examiner will forward all perfected NRN requests (see IRM 4.10.26.5 and 4.10.26.6) to CCP using a Form 3198, Special Handling Notice for Examination Case Processing, unless it is determined that the case will close agreed in 90 days or less. If the case will close in 90 days or less, the field examiner will hold the NRN request and close it out with the administrative file at the conclusion of the examination, see IRM 4.10.26.7 for specific instructions.

  8. An Appeals Officer will not work a NRN request that was returned to the taxpayer. If the NRN request was returned and the date crossed out, the taxpayer must file another NRN request to be considered by Appeals. However, if the taxpayer has paid the interest and files a NRN request, even if imperfect, it could be considered an informal claim. See IRM 25.6.1.10.2.6, Claims for Credit or Refund – Form and Content.

    Note:

    Neither Centralized Case Processing (CCP) nor the Appeals Complex Interest Team will consider any Net Rate Netting request where the field examiner has crossed out the received date.

4.10.26.7  (08-27-2012)
Processing Net Rate Netting Requests by Field Examiners

  1. For all perfected NRN requests where the associated case will not be closing within 90 days, the field examiner will forward the request to CCP on a Form 3210, Document Transmittal.

  2. For all perfected NRN requests where the associated open case will close agreed within 90 days:

    1. The field examiner will check "Net Rate Netting" under the "Special Interest Features" on the back of Form 3198, Special Handling Notice for Centralized Case Processing.

    2. The field examiner should also identify any statute of limitation issues that may impact allowance of the NRN request in the "Other" section under "Special Interest Features" .

    3. The field examiner will properly index and identify the workpapers for the NRN request on the Examination Leadsheet and in the Examination Plan.

    4. The field examiner will inform the taxpayer that the resolved tax periods will be worked when the case is closed and the unresolved tax periods will be retained until they are resolved. See 4.10.26.2.1(1) for definitions of resolved and unresolved tax periods.

    5. For any case involving unagreed issues not related to the NRN request, Form 4665, Report Transmittal, must note that there is a NRN request to be processed, date received, and where to find the NRN request and related workpapers.

4.10.26.8  (08-27-2012)
Form Letters Used for Net Rate Netting Requests

  1. Field examiners will use form letters to acknowledge, perfect, or return NRN requests.

  2. These letters are intended for the exclusive use of field or office examiners and Appeals Officers. They may be used by tax examiners or other campus employees involved in the processing of the requests. Separate procedures for campus staff may be found in IRM 20.2.14,Netting of Overpayment and Underpayment Interest.

  3. General Instructions for NRN Letters. Complete the following fields:

    1. Date the letter is prepared

    2. Person to contact

    3. Employee Identification Number

    4. Contact Address

    5. Contact Telephone Number

    6. Taxpayer name

    7. Taxpayer Identification Number

    8. Tax Period(s)

    9. Date Received, date the NRN Request was received

    10. Taxpayer name and address should be inserted (in "To:" box)

    11. Follow existing Power of Attorney procedures, as applicable.

4.10.26.8.1  (08-27-2012)
Specific Instructions for Letter 4126, Acknowledgement of Net Rate Netting Request

  1. Letter 4126, Acknowledgement of Net Rate Netting, informs the taxpayer that:

    1. The request will be reviewed for accuracy and completeness.

    2. The receipt of the NRN request does not guarantee that it will be allowed.

    3. Resolved tax periods will be processed and the unresolved tax periods will be retained for processing when they are resolved. See IRM 4.10.26.2.1(1) for definitions of resolved and unresolved tax periods.

  2. If the taxpayer makes a verbal request for NRN, do not send Letter 4126. Ask the taxpayer to provide a written NRN request as required by Rev. Proc. 99-43 or Rev. Proc. 2000-26.

  3. Upon receipt of a written NRN request, determine if the required information is included in the request.

  4. If the information is adequate, date stamp the NRN request, prepare and send Letter 4126, Acknowledgement of Net Rate Netting Request.

4.10.26.8.2  (08-27-2012)
Specific Instructions for Letter 4127, Perfection of Net Rate Netting Request

  1. Rev. Proc. 2000-26 states that a taxpayer is not required to use Form 843, Claim for Refund and Request for Abatement, to request NRN under IRC 6621(d). If Form 843 is not used, the taxpayer must furnish the required information in a letter or written statement that includes the following:

    1. Type(s) of tax and/or type(s) of return(s)

    2. Tax periods involved

    3. Underpayment amount(s) and date of payment, if paid

    4. Overpayment amount(s) and date of refund or offset

    5. Identification of overlapping period(s)

    6. Certification that the net rate has not been used during the identified overlapping period(s)

    Note:

    Field examiners should be aware that a prior netting adjustment could have been made during an overlapping period(s), but it may not have been completely used – there may be a remaining amount of an overpayment or underpayment that can still be netted. However, the field examiner should request the taxpayer provide specific unused amounts, if available.

  2. If the NRN request is imperfect (it does not contain the information required or uses periods already used), then the field examiner will:

    1. Prepare Letter 4127: Perfection of Net Rate Netting Request.

    2. Cross out the date stamp and initial the original NRN Request to void the submission.

    3. Issue Letter 4127 to the taxpayer and maintain a copy in the case file.

4.10.26.8.3  (08-27-2012)
Specific Instructions for Letter 4128, Net Rate Netting Request Involving More than One TIN

  1. In cases involving more than one TIN, if the NRN request involves only netting between overlapping periods of "different taxpayers " :

    1. Complete the first paragraph of Letter 4128, Net Rate Netting Request Involving More than One TIN.

    2. Complete the second paragraph as follows: "There are no periods pertaining to your TIN(s)" .

    3. Cross out the date stamp on the NRN Request and initial it to void the submission.

    4. Send Letter 4128 to the taxpayer with the original NRN Request and maintain a copy of Letter 4128 and the voided submission in the administrative case file.

    5. Do not disclose information related to other taxpayers submitting the NRN request.

  2. If the field examiner concludes that there are periods attributable to the taxpayer who submitted the request and those tax periods are subject to net rate netting:

    1. Indicate the periods in the second paragraph of the letter.

    2. Send Letter 4128 to the taxpayer with the original NRN Request and maintain a copy of Letter 4128.

4.10.26.8.4  (08-27-2012)
Specific Instructions for Letter 4129, Return of Imperfect Net Rate Netting Request

  1. If the field examiner determines that the NRN Request is imperfect and the NRN Request is not perfected by the taxpayer in the required period of time, the field examiner will take the following actions:

    1. Prepare Letter 4129, Return of Imperfect Net Rate Netting Request.

    2. Cross out the date stamp and initial the NRN request to void the submission.

    3. Issue Letter 4129 and enclose the voided submission to the taxpayer and maintain a copy of Letter 4129 and the voided submission in the administrative file.

Exhibit 4.10.26-1 
Flowchart of Net Rate Netting Procedures

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