4.51.6  Issue Management Process Guide

4.51.6.1  (08-01-2007)
Introduction

  1. This process guide sets forth guidelines for providing expedited direction to the field on significant LMSB compliance issues. This guide’s focus is on, but not limited to, Tier I and II issues.

  2. IRM 4.51.5, Industry Focus and Control of LMSB Compliance issues, provides an overview of the tiering of industry issues, and describes the process for identifying and tiering such issues.

  3. Once an issue is approved by the Compliance Strategy Council (CSC) as a Tier I or Tier II issue, the process described in this guide should be followed with the objective of providing direction to the field as quickly as possible.

  4. Issue Management Teams (IMT) are an essential part of this process and should be used on issues of high strategic importance and can facilitate the development and resolution of significant issues.

  5. Once direction is provided to the field, the Issue Owner Executive should consider the best strategy to employ to improve compliance on the issue. This may involve the use of an Issue Specialization Team (IST); see IRM 4.51.6.9, Controlling the Case Inventory.

4.51.6.2  (08-01-2007)
Guiding Principals

  1. From the outset of its formation, each IMT must attempt to clearly define the goals it intends to pursue with regard to the issue.

  2. An IMT should be flexible with regard to the options it pursues.

  3. Issues with an established legal position or that are factual generally may be resolved quickly using administrative guidance.

  4. Issues with a novel or unsettled legal position may be addressed through administrative guidance, or may involve written legal advice from the Office of Chief Counsel or published guidance requiring the approval of the Department of Treasury.

  5. An IMT will also consider whether an issue needs to be addressed through litigation.

  6. For any action requiring Chief Counsel involvement, IMTs should consult and include Chief Counsel personnel in the issue management process as early as possible.

  7. In working through the issue management process, IMTs should strive to identify the best case or cases for factual and legal development.

  8. IMTs should involve the Office of Appeals in the process as early as possible and seek Appeals' issue coordination where appropriate.

  9. Where other cross-functional coordination is appropriate, IMTs should invite participation of impacted operations as early in the process as possible.

4.51.6.3  (08-01-2007)
Issue Referral and Approval

  1. LMSB Directors evaluate and forward issues to the CSC that are considered potentially significant or strategically important for approval as Tier I or II LMSB compliance issues. See IRM 4.51.5.3, Compliance Strategy Council (CSC) Designation of Tier I and II Issues.

  2. Upon designation of the issue as a Tier I or Tier II issue by the CSC, the designated Issue Owner Executive will generally establish an IMT.

  3. Teams working an issue prior to the elevation of the issue by the CSC to Tier I or II status will generally continue to work the issue as an IMT.

  4. One of the purposes of the IMT is to develop the issue and gather information so that clear direction can be issued to the field as quickly as possible.

4.51.6.4  (08-01-2007)
Issue Champion Selection

  1. The LMSB Issue Owner Executive will select an Issue Champion to lead the team while retaining oversight responsibility.

  2. The Issue Champion position should be filled by either an LMSB Executive receiving an additional assignment, or by a Senior Manager detailed to lead the IMT. The preferred option is to detail a Senior Manager who can focus full-time on moving the project forward with the objective of providing guidance to the examiners within the time frames described in this IRM Section, as well as delivering on the IMT's milestones.

  3. The Issue Owner Executive will determine if an issue will be worked as a single issue or as a primary issue with a series of related sub-issues. Depending on the number and size of the sub-issues that may be involved, the Issue Owner Executive may decide sub-teams are needed and that more than one Issue Champion should be appointed.

  4. In consultation with the LMSB Issue Owner Executive and the Issue Champion, the LMSB Division Counsel will assign a Counsel Issue Owner to advise the Issue Owner Executive and Issue Champion on the issue and provide executive-level coordination of the issue within Counsel. The Counsel Issue Owner will be an LMSB Area Counsel, who may delegate responsibility over the issue to a Deputy Area Counsel or Associate Area Counsel.

4.51.6.5  (08-01-2007)
Issue Champion Duties

  1. The Issue Champion, working with team members, is responsible for timely addressing the issue under the procedures set forth in this guide. To accomplish this, the Issue Champion will establish milestones for the completion of key actions

  2. The duties of the Issue Champion will include:

    1. Selecting and leading the Team;

    2. Creating an Action Plan with milestones to address the issue;

    3. Coordination with impacted functions/agencies;

    4. Data Tracking and Recordkeeping;

    5. Briefings and reporting to the Issue Owner Executive and CSC per IRM 4.51.5.6, Report to CSC of Tier I and Tier II Issue Results;

    6. Communicating with Impacted Teams - The rules of engagement as provided in IRM 4.51.1, LMSB Examinations, Rules of Engagement should be followed;

    7. Communicating with affected operating Divisions and functions;

    8. Communicating with external stakeholders and engaging them in the process, as appropriate;

    9. Facilitating clearance of Directives and requests for legal advice or published guidance, as appropriate.

    10. Directing the implementation of the determined compliance strategy.

4.51.6.6  (08-01-2007)
Issue Management Team Membership

  1. The size and make up of the IMT will depend on the scope and complexity of the issue involved. The Letter of Understanding with NTEU on LMSB Administrative Guidance will govern IMTs; see IRM 4.51.2, Exhibit 4.51.2–1.

4.51.6.6.1  (08-01-2007)
Issue Management Team members should include

  1. Technical Advisor. The Technical Advisor can assist with the identification and selection of the best cases to work. The Technical Advisor has knowledge of factual scenarios for the issue and legal arguments raised by taxpayers and their representatives and can provide advice on working the issue. The Technical Advisor can assess proposed tax positions in terms of administration and application and work with Counsel to draft the direction to be issued or to identify potential cases to designate for litigation.

  2. Appeals Technical Guidance Coordinator (TGC). The TGC can provide insight to the IMT on factual scenarios for the issue and the legal issues raised by taxpayers and their representatives, assess proposed tax positions in terms of administration and application, and draft Appeals Settlement Guidelines (ASG) or an Appeals Settlement Position (ASP) that reflects the hazards of litigation. However, the Appeals role on the IMT is circumscribed by the ex-parte provisions of Revenue Procedure 2000-43 and the mandate for independence and, as a result, will not include certain activities/efforts discussed below (case development, decisions on issue examination, identification of cases for litigation, etc.) The Appeals representative will be assigned by the Appeals Director, Technical Services in consultation with the Issue Owner Executive and/or the Issue Champion and will ensure appropriate issue coordination in Appeals. The Appeals representative will be assigned by the Appeals Director, Technical Services in consultation with the Issue Owner Executive and/or the Issue Champion and is tasked with making the IMT's issue a coordinated issue.

  3. Representative from LMSB Counsel. In addition to the Counsel Issue Owner, there will be an LMSB Counsel representative or representatives assigned to the IMT. The LMSB Counsel representative assigned to the IMT will generally be an Industry or Issue Counsel with expertise on the issue who can assist in the identification of cases and provide expertise related to the factual scenarios of the issue, the legal issues raised by taxpayers, and the appropriate application of legal positions. The LMSB Counsel representative will participate in the drafting of direction on the issue to the field, as well as the identification of potential cases for litigation designation. The LMSB Counsel representative will be assigned by the LMSB Division Counsel and/or Counsel Issue Owner in consultation with the Issue Owner Executive and/or the Issue Champion.

  4. Representative from National Office Chief Counsel. The National Office Chief Counsel representative will be assigned to the IMT to provide support to the team until the direction is drafted and issued to the Field. The representative will be an attorney or attorneys assigned by the Associate Chief Counsel(s) with subject matter jurisdiction over the issue in consultation with the LMSB Division Counsel, the Counsel Issue Owner, the Issue Owner Executive, and/or the Issue Champion. The representative will assist by providing legal expertise on the issue and will serve as a liaison between the IMT and National Office Chief Counsel to facilitate effective and prompt communication and feedback between the IMT and the Associate offices. The Representative will participate in the drafting of the direction to the field on the issue.

4.51.6.6.2  (08-01-2007)
Other Members

  1. At the discretion of the Issue Owner Executive and/or the Issue Champion, other members that may be included on the IMT at any point, as needed, are:

    1. Team Managers either working cases with the issue or familiar with the issue. They can provide insight on factual development and possible deviations to the factual scenarios and arguments raised by taxpayers and/or representatives. They can also assist with soliciting input from taxpayers on key cases.

    2. Revenue Agents working cases with the issue. They can provide insight into factual scenarios and arguments raised by taxpayers and/or representatives. They can also assist with soliciting input from taxpayers on key cases.

    3. Representatives from other affected LMSB Industries. They can provide insight into factual scenarios and arguments raised by taxpayers and/or representatives, assess proposed resolutions in terms of administration and application, and ensure LMSB Industry-wide consistency on issues.

    4. Representatives from other affected operating divisions. They can provide insight into factual scenarios and arguments raised by taxpayers and/or representatives, assess proposed resolutions in terms of administration and application, and ensure Service-wide consistency on issues.

    5. Other functions or specialists as deemed appropriate. For example, the IMT may consider the services of Computer Audit Specialist, Employment Tax Specialist, Economist, Engineers, Financial Products Specialists, Transactions Specialist, International Specialists, etc. As well as the services of Performance, Quality, and Audit Assistance (PQA) and Strategy, Research, and Program Planning (SRPP).

4.51.6.6.3  (08-01-2007)
Issue Management Team Time and Travel

  1. For non-tax shelter IMTs, LMSB IMT members should charge their time to activity code 526, Pre-filing Technical Guidance. Activity code 529 should be used for corporate tax shelter IMTs. Representatives from other offices should check with their functions to determine how their time should be charged. Travel expenditures will be considered case-related.

4.51.6.6.4  (08-01-2007)
Industry Issue Coordinator

  1. As an Industry Headquarters Analyst, the Industry Issue Coordinator will help shepherd the issue and the IMT through the issue management process. See IRM 4.51.5.2, Process of Identifying and Ranking Industry Issues.

4.51.6.7  (08-01-2007)
Issue Management Process

  1. The overall goal of the issue management process is to provide direction to the field on an issue as quickly as possible. The chart in Exhibit 4.51.6-2, Issue Management Team Milestone Chart, details the time frame for completing the steps and milestones of this process.

4.51.6.7.1  (08-01-2007)
Initial Meetings

  1. The first step in the management process will be to hold a preliminary meeting with the Issue Owner Executive, the Issue Champion, and the Counsel Issue Owner to review the issue scope and resource needs, including the composition of the IMT. Following this meeting, an IMT meeting will be held to determine the overall issue management strategy. The creation of the IMT and the determination of the initial track the IMT will undertake should be accomplished within the first 30 days of the process.

4.51.6.7.2  (08-01-2007)
Announcement of Team

  1. Once the IMT has been formed, the names of the Issue Champion and IMT members along with a description of the issue and how the issue is to be tracked will be posted to a web page established by the IMT. The web page will generally be established on either a Technical Advisor or Field Specialist website as determined by the IMT. Industry directives providing field direction on the issue will be posted as issued to this web page. This web page will be linked to the LMSB Industry Issue Focus web page, See IRM 4.51.5.3, CSC Designation of Tier I and II Issues. The Issue Owner Executive should consider issuing an "alert" that describes the issue and initial direction as to how to identify the issue in the field.

4.51.6.7.3  (08-01-2007)
Determination of the Issue Management Strategy

  1. The issue management process provides for two tracks or timelines for addressing an issue and providing direction to the field. Factors such as the complexity of the issue and whether an established legal position exists will determine which track is appropriate for the IMT to follow. Issue Owner Executives have the flexibility to change tracks or modify actions in response to changes in compliance risk or as facts are developed that indicate a different approach should be used.

4.51.6.7.3.1  (08-01-2007)
Track A

  1. The goal under this track is to provide direction to the Field on an issue within 120 days. The types of issues worked using this process will generally have established legal positions and/or be factual issues.

4.51.6.7.3.2  (08-01-2007)
Track B

  1. Track B is used when the Issue Owner Executive recognizes that the type of direction needed on an issue will require more than 120 days to develop. The goal under this track is to provide direction to the field as quickly as possible. The types of issues that will be managed under this track are more complex transactions, which will require more development and legal analysis than those issues that fall under Track A. In these situations, a stepped approach will be used by the IMT, requiring the issuance of interim administrative guidance to the field on the issue within 120 days. Further guidance, when developed, will be issued to ensure appropriate issue resolution - the amount and timing of additional guidance to be issued is the responsibility of the Issue Owner Executive/Issue Champion, but in any event communication with stakeholders regarding the status of guidance is paramount to managing the issue and should be done periodically to ensure clarity of issue development.

4.51.6.7.3.3  (08-01-2007)
Factors to Consider in Determining the Appropriate Track

  1. Cases Previously Identified and Previous Issue Development. The IMT should strive to identify and develop as fully as possible the best cases for any particular issue. In deciding if an issue will be addressed under Track A, the IMT should review cases already identified. If no cases have been identified, or if the issue has not been fully developed, the IMT should determine if this can be done within the required periods.

  2. Need for Type of Legal Advice, Published Guidance, or Litigation on an Issue. The IMT, with the assistance of assigned Counsel, should determine if legal advice, published guidance, and/or a litigation strategy is needed to address the issue. In deciding if an issue will be addressed under Track A, the IMT should determine if Counsel will be able to issue legal advice within the required periods.

  3. Single or Multiple Issues/Tracks. The IMT should determine if the issue will be worked as a single issue or as a primary issue with a series of related sub-issues that can be addressed quickly using Track A.

4.51.6.8  (08-01-2007)
Action Plan and Milestones Report

  1. Unless otherwise stated, all milestones are applicable to both tracks.

  2. Based on its initial findings, the IMT will develop an action plan for the issue with key milestone dates to address the issue within the timetable of the appropriate track. See Exhibit 4.51.6-2 for a chart detailing the timeframes for completing the milestones. The IMT will include the required milestones and actions in a report to the CSC as required by IRM 4.51.5. If a report to the CSS is not required, a report should be prepared, in the template format, for the Issue Owner Executive. See Exhibit 4.51.5-3, CSC Reporting Template.

4.51.6.8.1  (08-01-2007)
Milestone I – Fact Finding and Issue Development

  1. The IMT should strive to develop the best cases for an issue as fully as possible. The first actions to be completed in either track are to determine the scope of the issue, identify cases with the issue, and provide direction in developing the issue. In doing this, information will be secured from examiners, attorneys, and outside stakeholders. For many issues, preliminary information will already have been gathered by Technical Advisors or Emerging Issue Teams. The IMT will need to validate this information and complete the issue development process.

  2. The following are activities to be completed during fact-finding and issue development:

    1. Determine Scope of IMT Project. The IMT must first define the issue and agree on the scope of the issue to be resolved. The IMT will gather as much specific information as possible about the issue. For Tier I and II issues, the initial cross-industry impact should have already been identified in the tiering review and approval process.

    2. Determine Resources Needs. The IMT will need to determine what travel funds and other cost will be needed to determine the facts and develop the issue. If the IMT does not have sufficient expertise to develop the issue, in-house (ad-hoc or full-time) or outside experts should be requested. Additional resources may be needed as the issue is developed and should be requested, if necessary.

    3. Identify Workload. The IMT will identify the cases in the field (pre-filing and examinations) with the issue. Cases may have been previously identified by Technical Advisors or other experts. Additional cases should be identified through review of issue management systems, responses to Tier I-III announcements/alerts, surveys of audit teams/groups, change of accounting requests, and through other IRS personnel (e.g., Appeals/Counsel). National strategies, Initiatives/Tier I or Compliance Initiative Projects may be utilized with the assistance of SRPP to identify cases with the issue for examination.

    4. Monitor Workload. Once cases have been identified, communications with audit teams and monitoring systems should be established by the IMT. Protocols should also be established for other impacted operating divisions.

    5. Determine IRS Practices. The IMT must determine the Service’s examination practices regarding the issue by reviewing any existing IRS directives and other documents (e.g., Coordinated Issue Papers, LMSB Directives, Emerging Issue Papers, Audit Technique Guides, Appeals Settlement Guidelines, etc.).

    6. Develop Audit Techniques. The IMT’s first work product should be the audit steps needed to find the issue in an examination. Detailed audit techniques will then be drafted to develop the issue. The audit techniques should include a sample Information Document Request (IDR) or series of such requests developed with the assistance of the IMT’s LMSB Division Counsel and National Office Counsel members. The goal should be to secure the data needed as early in the audit as possible.

    7. Develop Guidance on Securing Outside Experts. Determine whether outside experts should be used in the examination of the issue should be determined. If so, direction on selecting experts, drafting statements of work, and what documents are to be requested from the taxpayer should be developed by the IMT. The IMT should also be involved in reviewing expert reports before they are issued to the taxpayer.

    8. Select Cases for Issue Development. The IMT will need to determine the best cases for development.

      • Identification of Best Cases for Development. The IMT may issue a questionnaire, developed with the assistance of Counsel, to all examination teams with the issue or likely to have the issue, with the goal of quickly identifying the best cases for further development or possible litigation. The questionnaire should request information on the magnitude (tax impact) of the issue, examining techniques, and how the issue is being worked or resolved in examinations. The IMT should also survey other IRS personnel (Appeals/Counsel) who may be involved with the issue. Discussions with Appeals with respect to identification of best cases for development must conform to the ex-parte provisions of Revenue Procedure 2000-43 and the mandate for independence and be limited to non-case-specific discussions of fact patterns.

      • Prevention of Delays in Issue Development. To help prevent delays in the development of an issue by the IMT (for example, where one case requires the issuance of summons); the IMT should attempt to work a minimum of three cases for full development. The IMT should scan or copy any documents obtained from the cases and forward to all IMT members, including Counsel, at the same time for review. As needed, the IMT should conduct site visits to see the issue first-hand and interview appropriate parties to ensure that all facts and activities are identified and validated. Where necessary and appropriate, the IMT should request case-specific advice from Counsel to assist in case development and should make clear any need for expedited assistance from Counsel. The IMT should closely coordinate with its Counsel members during case development to determine whether and how case-specific legal advice should be requested.

    9. Solicit Outside Input. Generally, the IMT should solicit input from taxpayers and other outside stakeholders (industry/trade associations) on an issue. See IRM 7.40.1, Industry Issue Regulation Program, for Federal Advisory Committee Act rules for meeting with external groups. The goal of these discussions with outside stakeholders will be to gain a better understanding of the issue (facts, problems, and economic factors that influence tax considerations). Discussion should include the industry accounting procedures and methods for treating the issue for book purposes and tax return preparation methodology. As appropriate, the IMT should also solicit the views of other impacted, federal agencies, state governments, and international taxing authorities (e.g., through the Joint International Tax Shelter Information Centre) on the issue.

    10. Develop Fact Patterns for Legal Analysis and Interim Guidance. Once the facts have been developed, the IMT, working closely with its Counsel members, will draft key fact patterns for legal analysis. Concurrently, the IMT should prepare an interim directive to the field on issue development.

4.51.6.8.2  (08-01-2007)
Milestone II – Legal Analysis

  1. As an issue is developed, the IMT, working closely with its Counsel members, will need to determine whether administrative guidance, written legal advice, published guidance, litigation, or some combination of these approaches is necessary to manage the issue in the field.

4.51.6.8.2.1  (08-01-2007)
LMSB Administrative Guidance

  1. As the issue is developed, administrative guidance may be appropriate.

    • See IRM 4.51.2, LMSB Administrative Guidance.

    • Authority - The Commissioner has the authority to administer and enforce the Internal Revenue Code (Treasury Order No. 150-10). LMSB executives issue administrative guidance to field employees to promote better understanding, consistent tax treatment and management of issues.

    • Administrative guidance may address administrative procedures and compliance actions, provide operational instructions for planning and conducting examinations, provide interim technical guidance for examiners, address time and resource allocations in the field, and mandate the use of specific audit techniques in developing issues.

    • Specific forms of administrative guidance include Coordinated Issue Papers and LMSB Directives.

    • Administrative guidance should be coordinated with Counsel before issuance, as appropriate, in accordance with the requirements of IRM 4.51.2.

4.51.6.8.2.2  (08-01-2007)
Written Legal Advice from Chief Counsel

  1. As the issue is developed, written legal advice from Chief Counsel may be appropriate.

    • See IRM/CCDM Part 33.1, Legal Advice.

    • Written legal advice from Chief Counsel may take a variety of forms, ranging from case-specific advice from Field Counsel or the Associate Chief Counsel offices, a Technical Advice Memorandum, or a Generic Legal Advice Memorandum. Requests for written legal advice from Counsel should be made as early in the issue development process as possible.

    • While legal advice is not an official ruling or position of the Service, Service employees, including Appeals officers, may use such advice, as appropriate, in the development and resolution of a case in which the advice was issued or, in the case of generic legal advice, in cases to which such advice is applicable.

    • The requirements for obtaining written legal advice from Chief Counsel will vary depending upon the form of advice requested. IMTs are required to work through their assigned LMSB Counsel members in order to ensure that proper procedures for making a request for legal advice are followed.

    1. Generic Legal Advice. See IRM/CCDM 33.1.2.2.3.5, Additional Procedures for Certain Non-Taxpayer Specific Legal Advice, Including Generic Legal Advice.

      • Generic legal advice is written advice issued by an Associate Chief Counsel and is of general applicability. For example, the advice may address an issue that affects an entire industry or some discrete class of taxpayers, or it may address an issue by reference to a generic set of facts.

      • Generic legal advice may be issued either at the initiative of the Associate office or upon the request of a field office and will be signed by the Associate Chief Counsel. It may not be used or cited as precedent.

      • If an IMT requests this type of advice, the Associate Chief Counsel, the Industry Director overseeing the issue, and the LMSB Division Counsel or Area Counsel, as appropriate, will agree on a mutually acceptable timeframe for completion.

      • The Associate Chief Counsel office will confirm the agreement in writing, either by E-mail or by written memorandum, identifying the issues to be addressed and the expected date of completion.

    2. Technical Advice. See IRM/CCDM 33.2.1, Issuing Technical Advice Memorandum and Technical Expedited Advice Memorandum, and 33.2.2, Requests for Technical Advice and Technical Expedited Advice.

      • A Technical Advice Memorandum ("TAM" ) is advice furnished by an Associate Chief Counsel office upon a request from the field submitted in accordance with the provisions of Rev. Proc. 2007-2, or its successor, in response to any technical or procedural question that develops during the examination of a taxpayer’s return or the consideration of a taxpayer’s claim for credit or refund with regard to the interpretation and proper application of tax law, tax treaties, regulations, revenue rulings, notices, or other precedents published by the Associate office to a specific set of facts.

      • A TAM establishes the Service’s position only in the specific case for which the TAM has been requested. It may not be used or cited as precedent in any other case.

      • If a TAM is required, the IMT should work through its assigned LMSB Counsel members to prepare and submit the request, following the appropriate procedures for such requests, and work with the appropriate Associate Chief Counsel office(s) to ensure that the IMT can achieve the target completion timeframe.

4.51.6.8.2.3  (08-01-2007)
Published Guidance

  1. As the issue is developed, published guidance may be appropriate.

    • See IRM/CCDM 32.1, Chief Counsel Regulation Handbook.

    • Published guidance generally refers to that body of guidance that sets forth the definitive position of the Service, as approved by the Commissioner and the Department of the Treasury. Published guidance must be followed by all components of the Service and can be relied upon by taxpayers in litigation. For purposes of this section, published guidance includes Treasury Decisions, Notices of Proposed Rulemaking, Revenue Rulings, Revenue Procedures, and Internal Revenue Bulletin Notices and Announcements.

    • IMTs, through their assigned Field Counsel, should coordinate with the Special Counsel (Pre-Filing and Technical Guidance) in LMSB Division Counsel Headquarters as early as possible in the issue management process in order to ensure that recommendations for published guidance are raised with the Associate offices.

4.51.6.8.2.4  (08-01-2007)
Designation for Litigation

  1. As the issue is developed, the IMT may conclude litigation of the issue is appropriate for tax administration purposes.

    • See IRM/CCDM 33.3.6, Designating a Case for Litigation.

    • With respect to recurring significant legal issues affecting large numbers of taxpayers, an appropriate case with the issue may be designated for litigation in the interest of sound tax administration to establish legal precedent, and to conserve resources, and/or reduce litigation costs for the Service and taxpayers.

    • When under the jurisdiction of the Service, the designated issue in a case will not be resolved without a full concession by the taxpayer.

    • LMSB Division Counsel has primary responsibility for the litigation of LMSB cases in the Tax Court and the referral of general litigation and refund cases to the Department of Justice. In this role, Division Counsel is responsible for development and execution of litigation strategy, including selection of cases to litigate, whether to try or settle particular cases, whether to agree to mediation/arbitration, and whether to employ expert witnesses.

    • If the IMT believes that appropriate resolution of an issue requires the designation of a case for litigation, the IMT shall work closely with its assigned Field Counsel to ensure that the proper procedures for designation are followed.

4.51.6.8.3  (08-01-2007)
Milestone III - Direction to the Field Within 120 Days

  1. This section discusses the type of direction to the field that should be issued within 120 days of the formation of the IMT.

4.51.6.8.3.1  (08-01-2007)
Track A - Direction to the Field Within 120 Days

  1. After written legal advice is obtained and/or the analysis of the issue is complete, the IMT will develop proposed treatment approaches for the issue, considering the legal and factual basis for the position, and the inventory of cases involving the issue.

  2. Direction to the field may include the tax position to be followed on the issue and case closing instructions. In general, such direction should be communicated to LMSB managers and examiners with administrative guidance (e.g., a Coordinated Issue Paper or LMSB Directive). Use of communication vehicles such as the LMSB Managers’ News Briefs and the LMSB Frontline should be considered, as appropriate. The use of an IST to implement administrative guidance (see IRM 4.51.6.9) may also be appropriate.

  3. Working with the Appeals representative on the IMT, the IMT should ensure that the issue is properly coordinated with the Office of Appeals (through a Coordinated Issue Paper, as an Appeals Emerging Issue, or as an Appeals Coordinated Issue).

4.51.6.8.3.2  (08-01-2007)
Track B - Interim Direction and Case Support within 120 Days

  1. If the type of direction needed on an issue will require more than 120 days to develop, an interim directive will be issued to the field with an estimate of when additional guidance will be issued. Interim direction should be issued as LMSB administrative guidance (e.g., in the form of an LMSB Directive, Coordinated Issue Paper, or both) and should generally include Audit Techniques covering: sample IDRs; direction regarding how to find the issue; and direction regarding how to develop the issue.

  2. As the issue is being developed, the IMT will provide open case support and may issue additional directives.

    • The Issue Champion should be proactively involved with individual cases to ensure consistent treatment of the issue across Industries.

    • The Issue Champion is also responsible for providing technical support on the issue to LMSB examiners while direction and strategy is being formulated, so that cases are not closed in a manner contrary to pending advice or published guidance.

    • Working with the Appeals representative on the IMT, the IMT should ensure that the issue is appropriately coordinated with the Office of Appeals (through a Coordinated Issue Paper, as an Appeals Emerging Issue, or as an Appeals Coordinated Issue).

  3. In any event, the IMT should strive to promptly provide guidance of a type described above in IRM 4.51.6.8.3.1 and below in IRM 4.51.6.8.4 to ensure the field has sufficient direction to resolve the issue in their assigned workload.

4.51.6.8.3.3  (08-01-2007)
Decision to Examine the Issue

  1. Directives to the field on the issue will specify whether examination of the issue is mandatory and/or establish specific criteria when an examination of the issue must be conducted. This decision and any criteria will be determined by the IMT and approved by the Issue Owner Executive. Risk factors to consider when making this decision include, but are not limited to:

    • Adjustment potential/materiality;

    • Impact on future years;

    • Appeals and litigation considerations;

    • Resource availability; and

    • Time it would take to examine the issue.

    Procedures for requesting exception (statute problems, etc.) from the criteria should also be established.

4.51.6.8.4  (08-01-2007)
Track B - Milestone IV - Final Administrative Guidance

  1. After written legal advice is obtained and/or the analysis of the issue is complete, the IMT will develop proposed treatment approaches for the issue, considering the legal and factual basis for the position, and the inventory of cases involving the issue.

  2. Direction to the field may include the tax position to be followed on the issue and case closing instructions. In general, such direction should be communicated to LMSB managers and examiners with administrative guidance (e.g., a Coordinated Issue Paper or LMSB Directive). Use of communication vehicles such as the LMSB Managers’ News Briefs and the LMSB Frontline should be considered, as appropriate. The use of an IST to implement administrative guidance (see IRM 4.51.6.9) may also be appropriate.

  3. Working with the Appeals representative on the IMT, the IMT should ensure that the issue is appropriately coordinated with the Office of Appeals (through a Coordinated Issue Paper, as an Appeals Emerging Issue, or as an Appeals Coordinated Issue).

4.51.6.9  (08-01-2007)
Controlling the Case Inventory

  1. In drafting administrative guidance, the Issue Owner Executive and/or Issue Champion will need to review the known inventory of cases with the issue and determine the most effective way to work the cases with this issue. As an alternative to the normal examination process, the establishment of an IST in conjunction with or under the direction of the IMT should be considered.

4.51.6.9.1  (08-01-2007)
Establishment of an Issue Specialization Team

  1. Under the IST concept, all of the issues would be worked by experienced specialist resulting in the expeditious development of the issue and greater consistency in the examination of an issue in the field. Membership on an IST would be a temporary assignment.

4.51.6.9.2  (08-01-2007)
When to Utilize an Issue Specialization Team

  1. An IST should generally be considered for:

    • Complex issues or transactions;

    • Issues requiring time-consuming factual development (i.e. numerous documents to be secured and analyzed);

    • issues involving a significant number of taxpayers with the same or similar transactions.

4.51.6.9.3  (08-01-2007)
Issue Specialization Team Formation

  1. An Issue Owner Executive and/or Issue Champion can assemble an IST using one of two approaches, as appropriate, given the nature of the issue and the type of cases being addressed:

    1. Specialist Group. An existing or temporary group would take temporary full-time responsibility for addressing one or more specific compliance issues. This type of IST would report to one Issue Manager and need not be located in one geographic location. The Issue Champion would coordinate assignment of formal control over the cases to the IST with the Line Authority Executive or the IST could simply be used to support the efforts of the examiner assigned the case.

    2. Collateral Assignment. The Issue Champion would select IST members from multiple groups and locations throughout the country. The examiners would continue to report to their current managers, but would receive work assignments with regard to the specialized compliance issue from an Issue Manager. Depending on the needs for a particular issue, the IST members would be trained and work on the issue on either a part-time or full-time basis. The examiner’s manager would make workload adjustments to support the assignments.

4.51.6.9.3.1  (08-01-2007)
Issue Specialization Team Manager

  1. The IST Manager will generally be a first-line manager temporarily assigned by and under the direction of the Issue Owner Executive and/or Issue Champion. The IST manager should have a clear understanding of how to address the particular issue/transaction and be able to dedicate the needed time and resources to the IST.

4.51.6.9.3.2  (08-01-2007)
Issue Specialization Team Membership

  1. IST Membership:

    • The number and make-up of the IST members is a matter of judgment for the Issue Owner Executive and/or Issue Champion. Consideration should be given to the need for one or more Senior Agent positions and the need for a mix of Revenue Agents and Specialists.

    • Ideally, the IST members should have pre-existing experience in the issue/transaction and the willingness to specialize in the particular issue/transaction.

4.51.6.9.4  (08-01-2007)
Roles and Responsibilities

  1. The IST, IMT, and examination teams each have specific roles and responsibilities in the examination and development of the issue.

    1. Issue Specialization Team The roles and responsibilities of an IST established in conjunction with or under the direction of an IMT will include:

      • Assisting the examination team by working and developing the issue in accordance with LMSB Administrative or Published Guidance.

      • Coordinating with the assigned Technical Advisor or other specialist on the IMT for additional guidance.

      • Drafting IDRs.

      • Examining taxpayers records.

      • Reviewing Outside Experts reports.

      • Drafting of Form 5701, Notice of Proposed Adjustment, and Form 886, Explanation of Items, for the issue under the control of the IST and related penalties, if any.

      • Participate in meetings with the taxpayer regarding the ISTs issue.

      • Assist in writing rebuttals to the taxpayer's protest, participation in pre-Appeals conferences, and answering questions Appeals may have on the issue.

    2. Issue Management Team The roles and responsibilities of the IMT working with an IST will include:

      • Assign a Technical Advisor or other specialist to assist the IST.

      • Coordinate with other impacted Technical Advisor's and Specialists not assigned to the IMT or IST. An impacted Technical Advisor not assigned to an IMT should work through the IMT.

      • Provide direction to the IST on their issue.

      • Communicate changes in issue direction from the Issue Champion, Appeals, and Chief Counsel to the IST.

    3. Examination Team In addition to responsibility for all issues other than the issue assigned to the IST, the examination teams' responsibilities will include:

      • Issuing IDRs, summons, proposed adjustments, etc. developed by the IST or IMT.

      • Securing and shipping all records necessary for the ISTs issue.

      • Following Issue Champion guidance and promptly resolving the issue as appropriate.

4.51.6.9.5  (08-01-2007)
Resolving Differences

  1. Issues that arise between the IMT, IST, or Examination team with Technical Advisors or Specialist affected but not members of either of the teams, will be elevated to the Issue Champion for resolution.

  2. Items which can not be resolved between the assigned IMT member and IST manager will be elevated to the Issue Champion for resolution as soon as practical.

  3. Issues that arise between the IMT or IST and the Examination team will be elevated to the Issue Champion and the Line Authority Executive. IRM 4.51.1, Rules of Engagement, will be followed to resolve the differences.

4.51.6.10  (08-01-2007)
Closing out an Issue Management Team

  1. IMTs will generally be disbanded when guidance is issued and cases in examination no longer pose a significant compliance challenge. For some issues, this may never be the case. In these situations, the Issue Owner Executive will need to determine what resources should be allocated to the issue in the future. Existing experts in LMSB, Appeals, and Counsel may be sufficient to support the field. In other cases, new Technical Advisors or Specialist positions may need to be created.

4.51.6.11  (08-01-2007)
Recommendation to Close an Issue Management Team

  1. The IMT Issue Champion prepares a final report for the Issue Owner Executive recommending closure. Upon acceptance, the report will be sent to the CSC for approval. Once the report is accepted, the IMT will be formally disbanded. See Exhibit 4.51.6-3, Recommendation To Close an Issue Management Team.

  2. The final step will be to send letters of appreciation to all IMT members for their contribution. These will be prepared by the IMT Issue Champion and signed by the Issue Owner Executive.

Exhibit 4.51.6-1  (08-01-2007)
Glossary

Issue Champion. A LMSB Executive or Senior Manager delegated the responsibility to oversee an issue management team working to resolve specific tax issues.

Issue Management Team (IMT). A team formed under the direction of an Issue Champion to provide guidance to the field in resolving specific tax issues.

Issue Owner Executive. Any LMSB director with designated authority to oversee and resolve specific tax issues.

Issue Specialization Team (IST). A team of issue specialists formed under the under the direction of the Issue Owner Executive and/or Issue Champion to examine specific tax issues.

Issue Specialization Team Manager (IST Manager). The IST Manager will generally be a first-line manager temporarily assigned by and under the direction of the Issue Owner Executive and /or Issue Champion.

Line Authority Executive. An Industry Director (or delegate) with direct chain-of-command responsibility for personnel working on a given tax case.

Exhibit 4.51.6-2  (08-01-2007)
Issue Management Team Milestone Chart

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Exhibit 4.51.6-3  (08-01-2007)
Recommendation to Close an Issue Management Team

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