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Part 8. Appeals

Chapter 2. Pre-90-Day and 90-Day Cases

Section 1. Agreed Pre-90-Day Income Tax Cases

8.2.1  Agreed Pre-90-Day Income Tax Cases

8.2.1.1  (10-18-2007)
Introduction to Pre-90-Day Income Tax Cases

  1. This section covers processing a pre-90-day income tax case, also referred to as a non-docketed case, from the time it gets to Appeals until the time the case is closed. A pre-90-day case is a protested case on which a notice of deficiency or final adverse determination letter has not been issued.

  2. Many of the procedures in this section are used on every case regardless of the type tax involved; however, certain cases also require special procedures. These special procedures are covered in separate IRM sections containing information solely applicable to that type case.

  3. Special instructions take precedence over the general instructions found in this section. The following is a list of the cases and the IRM subsections where the special procedures are located:

    1. Estate and Gift Tax - IRM 8.7.4

    2. Excise Tax - IRC 8.7.5

    3. Employment Tax - IRM 4.23.16

    4. Bankruptcy - IRM 8.7.6

    5. Claims and Overassessments - IRM 8.7.7

    6. Appeals Tax Exempt and Government Entities - IRM 8.7.8

    7. Joint Committee - IRM 8.9

    8. Transferee/Transferor - IRM 8.7.10

    9. Appeals Team Cases - IRM 8.7.11

    10. Innocent Spouse Cases - IRM 25.15.12.

  4. The procedures in this IRM are general in nature and are intended to explain or provide references to cover the procedures for Tax Examiners (TE)s, Appeals Officers (AO)s, and Tax Computation Specialists (TCS)s involved in the processing of these cases.

    Note:

    References to Appeals Officers also include Appeals Team Case Leaders

  5. References to Examination include the Small Business and Self Employed (SB/SE), Large and Mid-Size Business (LMSB) and Tax Exempt and Government Entities (TE/GE) groups.

8.2.1.2  (10-18-2007)
Appeals Processing Services (APS) Receipt of a Pre-90-Day Case

  1. Verify the contents of the administrative file to determine if all documents, returns, etc. listed on transmittal Form 3210 were received.

  2. The administrative file must contain the following items:

    1. original or copy of one or more examined tax returns; See IRM 8.2.1.2.1.

    2. valid consents extending the statute (if needed);

    3. examining officer's report;

    4. other documents relating to the taxpayer's liability for the year or years involved, such as protests, claims for refund or abatement, and other pertinent documents or papers.

  3. Depending on the type of case, the administrative file may also contain the following collection documents:

    1. history;

    2. correspondence;

    3. financial information;

    4. other documents related to collection action taken on the taxpayer.

  4. Determine the statute date and ensure there are at least 180 days remaining on the statute before accepting the case. See IRM 8.21, Appeals Statute Responsibility, for detailed procedures on statutes and consents.

  5. Once the contents of the administrative file and the statute date are verified, sign the acknowledgment copy of the Form 3210, return it to the originator, and keep a copy in the case file.

8.2.1.2.1  (10-18-2007)
Situations Requiring an Original Return

  1. When an examination is extended to a year not included in the original assignment, Examination occasionally uses the taxpayer's copy of the return to do the examination rather than requisitioning the original return.

  2. Except as noted in (3) below, if the examination is based on the taxpayer's copy, the original return is not required as long as a copy of the return and a transcript of account are in the file. If the liability and credits shown on the copy differ from the transcript of account, Examination reconciles the information.

  3. Original returns must be used in the following situations:

    1. fraud cases

    2. delinquent returns

    3. jeopardy assessments

    4. 90-day cases

  4. The cases referred to in (3) above may be accepted without the original return if the case file contains an unfilled requisition, a transcript of account, and a copy of the return. However, fraud cases are only accepted under this paragraph if the missing original returns do not seriously weaken the Government’s position.

  5. If it becomes necessary for Appeals to issue a notice of deficiency, or if the case develops into one of the other exceptions in (3) above, the original return must be requisitioned through Appeals Processing Services (APS).

8.2.1.2.2  (10-18-2007)
Updating AIMS Status

  1. The administrative files are transmitted to Appeals, along with a full AMDISA for each return reflecting a current AIMS Status of 81, or an AMCLS print for each return.

    1. Update AIMS to Status 80 if the return is non docketed using IDRS command code AMSTUA.

    2. Verify the statute date on AIMS and, if necessary, update the statute date using IDRS command code AMSTUB.

  2. An IDRS search for TFPRT can be used to secure a print of a return filed electronically. See ADP and IDRS Information, Document 6209, for additional information on TFRPT.

8.2.1.2.3  (10-18-2007)
Establishing Pre-90-Day Cases on ACDS

  1. General procedures for APS receipt and control are contained in IRM 8.20.5, Appeals Case Processing Manual - Processing and Establishing New Receipts.

  2. Establish work units on ACDS as follows:

    1. Non-docketed - generally cases that have returns with the same TIN and MFT received at the same time and that are included in an RAR or other tax computation document are one work unit.

    2. Non-TEFRA Flow Through Entity Returns - is a separate work unit.

  3. In those special situations above where multiple cases are assigned to a work unit, the following rules apply:

    1. A work unit must have one case designated as the "key case" .

    2. Enter related cases first and the "key case" last. This enables the system to add all case dollars together and show the correct total on the "key case" .

  4. Use of key cases is most common when establishing petitioning and non-petitioning spouse cases. For these cases, card-in the petitioning spouse first with no dollar amount. Next, card-in the non-petitioning spouse with no dollar amount. Lastly, card-in the joint return with the total dollar amount.

    Note:

    For information concerning establishing key cases for Collection cases, see IRM 8.22.

8.2.1.2.3.1  (10-18-2007)
Establishing Reference Returns

  1. Control reference returns on ACDS.

  2. If the name and TIN on the reference return are the same as those on the case being established, control the reference return at the return level as part of the key case.

  3. If the name and TIN on the reference return are different, establish it as a separate case within the work unit. In this situation, the TYPE = REF

  4. In either situation, include the following information:

    • STATUTE DATE = The actual statute date, if applicable.

    • STATUTE CODE = If statute is not open, enter RFRTN

  5. Update AIMS to the STATUS 80, if required to be on AIMS. (Reference returns are non-docketed, and must updated to STATUS 80 even if related to a docketed case in STATUS 82.)

8.2.1.2.4  (10-18-2007)
Transferring Information from eCASE

  1. eCase allows for the electronic transfer of data from Appeals’ suppliers and customers to Appeals.

  2. Appeals receives data from ERCS (Exam), AOIC (Automated Offer-in Compromise) and ACS (Automated Collection System).

  3. Rather than manually inputting data into ACDS, eCase automatically transfers specific data fields.

  4. The employee requesting transfer of the information from eCase must verify the data and enter additional information when necessary.

8.2.1.3  (10-18-2007)
Sending the New Case to the Appeals Team Manager (ATM)

  1. Before sending the case to the ATM for assignment to an AO, the APS employee prepares Form 3210. He/she continues to monitor every case leaving APS to go to the Appeals Team Managers (ATM) and/or their employees (Appeals and Settlement Officers, Tax Computation Specialists, etc.) for assignment, rework, etc. regardless of whether or not they are physically located in the same office.

  2. Electronically generate these forms using the ACDS Form 3210 feature.

  3. A follow-up must be done on all unacknowledged Form 3210s ten days old or older, utilizing Form 10946 to maintain an audit trail.

  4. For information on what the ATM does with the case upon receipt for assignment, see IRM 1.4.28, Resource Guide for Managers.

8.2.1.4  (10-18-2007)
Receipt of New Assignment by Appeals Officer

  1. Cases arriving in Appeals fall into various categories of development - under developed; adequately developed; fully developed.

  2. Upon receipt of the case, the AO must determine if a case is adequately developed by the examiner and is ready for Appeals’ consideration. If the case is a claim for abatement of employment tax, the case can be returned if it is determined the claim is not meritorious.

  3. If the case is under developed, it may be returned to the field office for further development or other appropriate disposition. The AO and the ATM decide whether a non-docketed case will be returned to the field or retained in the AO's inventory and considered on the basis of what is included in the file. Those cases sent back to Examination are called "premature referrals."

    Note:

    The premature referrals with AIMS controls are returned using IDRS command code AMSTUB21

    .

  4. The AO prepares a memo using Form 10467, Appeals Division Feedback Report and Transmittal Memorandum, which is approved by the ATM, explaining what additional work should be done or what necessary information is missing. In these cases, Appeals releases jurisdiction back to Examination. APS must return the case and the AIMS controls using IDRS command code AMSTUB21.

  5. An adequately developed case contains enough information for the AO to make an informed decision. However, even an adequately developed case may not include all the necessary information required to assure successful litigation. While considering the case, the AO reviews any additional evidence provided by the taxpayer. If the new evidence was not previously reviewed by the examiner and is "significant" to the examiner’s findings, or appears to have been purposefully withheld from the originating office, return the case to the examiner for additional consideration.

  6. A fully developed case has all pertinent evidence fully documented with an easy-to-follow audit trail. Generally, the case contains the evidence needed to support the adjustments proposed in the RAR.

8.2.1.5  (10-18-2007)
Appeals Officer's (AO's) Decision to Return Case

  1. Do a preliminary review as soon as possible to determine whether the Pre-90-Day case will be returned to the originating Examination function. If the case requires further significant action or could probably have been disposed of without referral to Appeals, it is returned without delay. Appeals Officers do not act as investigators or examining officers, but are not precluded from requesting additional information or evidence if required. However, Appeals will not accept a case if it must obtain substantial additional information or evidence. The following circumstances, which are not all-inclusive, are grounds for returning a case:

    1. substantial additional information is required to resolve an important issue;

    2. significant unresolved factual variances exist between the examination report and the protest;

    3. the protest, when required, fails to set forth the taxpayer’s position, lacks substantive detail, or is otherwise seriously deficient, unless the lack of this information does not seriously hamper consideration of the case;

    4. there is a clear misapplication of the law that renders an important issue indefensible;

    5. new issues are discovered, which would be raised under the guidelines stated in policy statement P–8–2, formerly P–8–49, (the grounds for such action is a substantial one and the potential effect upon the tax liability is material); See IRM 8.6.1.5for additional guidance on raising new issues in Appeals;

    6. contrary to Service practice, the case is a reopening of a previously closed case as set forth in Rev. Proc. 2005-32, 2005-23 IRB 1206;

    7. some action must be taken or some event must occur before Appeals can adequately consider the case. For example, completion of Headquarters consideration of some aspect of the case (e.g., valuation of works of art), or required coordination with appropriate offices within Counsel, or a rebuttal to the taxpayers protest on Large Team Cases;

    8. there is a failure to secure timely consents extending the period of limitation for assessment unless the statute is open for other reasons, e.g., fraud, IRC 6501(e).

    9. claims for abatement of excise tax, employment tax, or trust fund recovery penalty which are not deemed meritorious by the Service;

    10. there is failure to comply with significant requirements of IRM Part 4 or IRM Part 5; e.g., the case should have been held in suspense in Examination pending clarification of Service position; required information was not included in the report or case file, etc.;

    11. technical advice should have been requested or was pending at the time of the referral; or

    12. agreed issues are not fully developed or are technically incorrect and have a material tax effect in a potential Joint Committee case.

  2. Determine whether Examination needs to take further significant action on the case or whether the case could have been disposed of without referral to Appeals. If either condition exists, promptly return the case to Examination with an explanatory memorandum citing the reason(s) why the case is being returned and the actions required.

  3. If one or more statutes are extended using Special Consent Form 872-A,Form 872-IA, Form 872-0, or Form 872-R, send the taxpayer a completed Form 872-U, Change of IRS Address to Submit Notice of Termination of Special Consent to Extend the Time to Assess Tax. See IRM 8.21.3, Notifying Taxpayer of Change of IRS Address for Termination of Special Consents.

8.2.1.6  (10-18-2007)
Appeals Officer's Preliminary Review of Case

  1. Close unnecessary original returns or files discovered during the preliminary review to the campus or the originating office, as appropriate.

  2. During the preliminary review of the case, the AO identifies all CCI, ACI, Emerging issues and International Issues found in IRM 8.7.3, Technical and Procedural Guidelines. It is the responsibility of the ATCL/AO to prepare and forward a referral, through their ATM, to Technical Guidance on Form 13381 when the case has any of the following issues:

    1. International Issues (including International Penalty issues)

    2. Compliance Coordinated Issues (CCI)

    3. Appeals Coordinated Issues (ACI) (including category of case)

    4. Emerging Issues (EI)

  3. Referrals of E&G valuation issues with tax of $10 million or more are made in accordance with IRM 8.18.1, Valuation Assistance Procedures.

  4. Refer all TEGE issues, Exempt Plans (EP) issues, Exempt Organizations (EO) issues, Tax Exempt Bonds (TEB) issues and Government Entities (GE) issues, to the Appeals TEGE Team Manager in accordance with IRM 8.7.8, Tax Exempt and Government Entities (TE/GE) Cases.

8.2.1.7  (10-18-2007)
Uniform Acknowledgment Letter Procedures for AOs

  1. Generally, the Appeals Team Manager generates and issues the Letter 4141 (CG), Uniform Acknowledgment Letter, or other approved UAL substitute. See IRM 1.4.28.3, Resource Guide for Managers, Appeals Managers Procedures, for additional information on procedures taken by the ATM.

  2. Within five workdays from receipt of a newly assigned case verify that Letter 4141 (CG), Uniform Acknowledgment Letter or an approved UAL substitute (collectively referred to as UAL) was generated and issued to the taxpayer. This can be verified by identifying the dated sub-action code "CO-UAL" entry on the case activity record (CAR) as well as locating a copy of the UAL in the case file. Also verify the accuracy of the automatic documentation entries and if differences are noted document the findings on the CAR.

    Note:

    Duplicate letters are not required for joint filers residing at the same address. See IRM 1.4.28.3.

  3. Immediately inform the ATM if the UAL documentation is not on the CAR. The UAL must be generated using the Appeals Generator of Letters and Forms (APGolf) under the signature of the ATM. Document the activity on the CAR.

  4. The documented "CO-UAL" entry is considered proof the UAL was issued to the taxpayer.

  5. If at any time it is discovered the taxpayer did not receive the UAL, immediately take steps to provide the taxpayer with the UAL. The date of the letter for time frame compliance purposes is the date the letter was first generated.

  6. The time frame for generating and issuing the UAL is no later than 30 days from the date the case is received in Appeals. There are no exceptions to this time frame for protested Pre-90-Day and protested excise and employment tax cases.

  7. The publications or notices shown as enclosures on the face of the UAL letter are also identified on the CAR next to the "CO-UAL" sub-action entry. Recording the enclosures sent with the UAL serves as the employee's written explanation of the procedures described in the publications or notices to the taxpayer. For example:

    By enclosing You are explaining -
    Notice 1016, How to Stop Interest on Your Account how to stop interest on a proposed or potential liability.
    Publication 4227, Welcome to Appeals the Appeals process.
    Publication 4167, Introduction to Alternative Dispute Resolution post Appeals mediation, fast track settlement, fast track mediation, early referral and arbitration.
    Publication 4576, Orientation to the Penalty Appeals Process the Appeals process, right to representation , and payment options for penalty appeals cases.

8.2.1.8  (10-18-2007)
Conducting the Conference

  1. Appeals conferences are informal to promote frank discussion and mutual understanding. Do not consider ideological kinds of arguments.

  2. The AO must handle cases objectively with the goal of reaching a sound decision based upon the merits of the issues in dispute and not with the attitude that settlements must be obtained. The AO must be thoroughly prepared for all aspects of a case to maximize the possibility of closing the case with one conference.

  3. Strive to resolve the disputed issues in a quasi-judicial manner. It is essential to have an open mind and genuine interest in working out a mutually acceptable agreement.

  4. Conference techniques vary among cases and representatives, but there is no substitute for preparation, judgment and common sense.

  5. The AO taxpayers, and representatives should set realistic target dates for the submission of additional information, proposals and counterproposals of settlement, and understand the need to adhere to them.

  6. Hold conferences on dates and in locations reasonably convenient to taxpayers and representatives. Generally, they are held at Appeals offices, suboffices, or other IRS-staffed posts of duty that are not temporary or part-time locations. However, managers may approve holding the conferences at other sites when feasible and necessary to provide a convenient conference opportunity. Ordinarily, the amount in dispute is not an important factor in approving another conference site.

  7. Hold the number of conferences to a minimum. A frank discussion of the facts and law ordinarily brings a case to a prompt conclusion.

  8. If a taxpayer indicates, during a phone conference, that he or she wishes to consult with a qualified representative or otherwise seek advice, suspend the conference and reschedule. See IRC 7521. If the taxpayer makes the request during a face-to-face conference, the AO and taxpayer should try to complete the conference with the understanding the taxpayer will contact the representative afterwards.

8.2.1.8.1  (10-18-2007)
Examination Representatives Attending the Conference

  1. If advisable, Appeals may request representatives of the Examination Area Director, engineering, or other experts to attend conferences. Area Counsel personnel are generally not involved in Appeals conferences but may be present in cases where criminal prosecution is recommended by the Department of Justice and the fraud penalty is contested.

8.2.1.8.1.1  (10-18-2007)
Change of Appeals Officer After Initial Contact

  1. A taxpayer does not have the right to a conference with an AO or Settlement Officer (SO) other than the one who has been considering the case if that AO or SO is still available. However, the ATM or the Appeals Area Director may authorize a change when circumstances warrant.

8.2.1.8.2  (10-18-2007)
Assistance from Counsel in Pre-90-Day Cases

  1. In relatively uncomplicated Pre-90-Day cases, Appeals may request informal assistance from Counsel when advice is needed on the hazards of litigation, interpretation of the law, and/or evaluation of the evidence. This assistance is provided through informal arrangements between operating unit counterparts in Counsel and Appeals. This informal procedure is not intended to take the place of, or alter in any way, Technical Advice procedures.

  2. In large dollar and/or complex cases, Appeals may request that the cases be informally considered by Counsel. In addition, Counsel may be asked to attend settlement conferences. Counsel involvement must not violate any prohibitions against ex parte communications. See Rev. Proc. 2000-43, 2000-2 CB 404. Counsel will cooperate in providing this assistance as long as resources and workloads permit.

  3. With regard to both paragraphs (1) and (2), Counsel acts solely as an advisor and/or consultant and does not assume authority for the disposition of the case.

8.2.1.8.3  (10-18-2007)
Verification of New Material or Request for Further Development

  1. If additional information is presented for the first time during the Appeals conference, and that information substantiates a deduction or shows the source of revenue, etc. and is used to support the conclusions, include a description of the information received in the Appeals Case Memorandum (ACM). If necessary, include originals or photocopies of the documents in the case file.

  2. Give Examination the opportunity to timely review and comment on any significant new information or documentation presented by the taxpayer. "Significant new information" is information of a non-routine nature which, in the judgment of the AO, has an impact on the examiner's findings or changes the AO's evaluation of the litigating hazards.

  3. When it appears the new information or documentation was purposely withheld from the originating office, release jurisdiction and return the entire case to the originator.

  4. If the new information was not purposely withheld from the examiner and it relates to issues raised in the Revenue Agent's Report (RAR), consider retaining jurisdiction of the case but refer the new issues or information to Examination for timely review and comment.

    1. When seeking review or comment from Examination, always provide specific response dates in all communications sent to them.

  5. Where the taxpayer or representative offers to make payment of additional tax liability for slush fund or improper payment deductions, or reveals their existence to Appeals officials for the first time, discontinue Appeals consideration of the case. Return the case to Examination for appropriate action and possible referral to Criminal Investigation (CI).

8.2.1.9  (10-18-2007)
Requesting Work from Tax Computation Specialist

  1. Generate Form 3608, Request for Tax Computation Specialist (TCS) Service, from APGolf. ACDS automatically fills Box 1 of the form with essential information - requester name; phone number; symbols; and post of duty.

  2. Create a Schedule of Adjustment that identifies the adjustments needed.

  3. If there are supplemental instructions to the Schedule of Adjustments, complete Box 12.

  4. Use secure E-mail to send Form 3608 and the Schedule of Adjustments to the designated Appeals Tax Computation Team Manager (ATCTM).

  5. If there is no access to APGolf, complete the Form 3608 available on the TCS web site.

  6. If a situation arises when an immediate computation is needed, the AO may take the computation request to a local TCS to prepare the computation. The AO sends a concurrent E-mail to the ATCTM.

  7. The ATCTM determines the grade of the case and assigns the case using the TACS program on ACDS. For additional information on the procedures taken by the ATCTM, see IRM 1.4.28, Resource Guide for Managers.

  8. The ATCTM notifies the requester which TCS will work the case. The employee requesting the work, generally the AO, has responsibility for delivering the case to the assigned TCS.

8.2.1.10  (10-18-2007)
Reaching a Conclusion in the Case

  1. This subsection covers actions taken by an AO after carefully considering and discussing facts, law and arguments of the case with the taxpayer and either reaching a basis of settlement or determining there is no mutually acceptable basis for settlement.

  2. When the case is agreed, discuss the conclusion with the taxpayer to ensure complete understanding of the effects of the settlement.

    For example, where allowance of a net operating loss deduction reduces or eliminates a potential deficiency, advise the taxpayer interest will be assessed on the potential deficiency. Where desirable or advisable the taxpayer may also be advised in writing.

  3. When the case is unagreed, explain the following to the taxpayer.

    • the evaluation of the case;

    • additional action to be taken;

    • taxpayer's rights;

    • available Alternative Dispute Resolution options including Post Appeals Mediation as detailed in Rev. Proc. 2000-44.

  4. Unagreed case dispositions fall into three categories.

    1. Pre-90-day case disposition with a deficiency (defined in IRC section 6211). A statutory notice of deficiency is issued to dispose of the income tax (subtitle A), estate and gift tax (subtitle B), or excise tax (chapter 41, 42, 43 or 44 of subtitle D) case. The tax can be litigated in Tax Court.

    2. Pre-90-day case disposition without a deficiency. A statutory notice of deficiency is not issued to dispose of the case because there is nothing (no deficiency) to litigate in Tax Court.

    3. Protested excise tax (subtitle D other than chapter 41, 42, 43 or 44) or protested employment tax (subtitle C) case disposition. A statutory notice of deficiency is not issued in order to dispose of the case because these taxes cannot be litigated in Tax Court. See IRM 4.23.16.

      Note:

      See IRM 8.17.4, Settlement Computations and Statutory Notices of Deficiency, Notices of Deficiency, for details on preparing a statutory notice of deficiency in an unagreed case.

  5. The conclusion in the case is set forth in Form 5402, Appeals Transmittal and Case Memorandum, accompanied by a settlement computation (sometimes called an audit statement). Preparation of an Appeals Case Memorandum (ACM) is discussed in IRM 8.6.2, Conference and Settlement Procedures, Appeals Case Memo Procedures, and preparation of a settlement computation is discussed in IRM 8.17.2, General Settlement and Rule 155 Computations.

  6. When agreement is reached, the taxpayer or a duly authorized representative signs appropriate agreement forms. See IRM 8.6.4, Conference and Settlement Procedures, Reaching Settlement and Securing an Appeals Agreement Form. Actively encourage the taxpayer to pay any deficiency in full. If the taxpayer indicates they are unable to pay, discuss alternatives to full payment such as installment agreements or offers-in-compromise.

  7. Form and pattern letters have been developed for use as closing letters. Use these letters except in cases where a special closing letter is needed. The form and pattern letters are contained in ACDS under APGolf (Appeals Generator of Letters and Forms).

8.2.1.10.1  (10-18-2007)
Reviewing Official's Acceptance of Settlement Proposal

  1. If the taxpayer disagrees with a settlement that is approved by the ATM or other reviewing official the taxpayer is not entitled to a conference with the reviewing official.

8.2.1.10.2  (10-18-2007)
Reviewing Official's Rejection of Settlement Proposal

  1. When a reviewing official disapproves a settlement where the AO either recommended accepting the taxpayer’s settlement proposal or recommended action favorable to the taxpayer, the reviewing official discusses the case with the AO.

  2. If the AO adopts the position of the reviewing official or proposes a compromise conclusion adverse to the initial recommendation, the AO contacts the taxpayer to discuss the status of the case, and advises the taxpayer of the right to a conference with either the AO or the reviewing official.

  3. However, if the AO maintains the recommended settlement proposal as initially submitted is correct, the reviewing official contacts and advises the taxpayer of the right to a conference. The conference with the reviewing official is granted once a written request is received from the taxpayer.

  4. When the reviewing official disapproves the AO's settlement in a case and determines it should be more favorable to the taxpayer, he/she discusses it with the AO who takes one of two positions:

    • Adopt the reviewing official’s position or reach a compromise conclusion, in which case he/she contacts and advises the taxpayer of the revised disposition.

    • Disagree with the reviewing official's position, in which case the reviewing official contacts and advises the taxpayer of the disposition of the case.

  5. Regardless of which position the AO takes, the taxpayer is not entitled to a conference; however, a conference may be granted by either the AO or the reviewing official in order to close the case.

8.2.1.11  (10-18-2007)
Closing the Case to APS

  1. For detailed information covering the procedures taken by the ATM when the case is submitted for closing by the AO, see IRM 1.4.28, Resource Guide for Managers.

  2. After the ATM completes the "Closing Cases" on ACDS and inputs an ACAP date, the case information automatically goes to the PEAS Unassigned box.

  3. The ATM either walks the case into APS or mails it to the appropriate APS office.

8.2.1.11.1  (10-18-2007)
Closing Cases with Specialized Issues or Procedures

  1. IRM 8.20.7, General Case Closings Requiring Special Actions, covers some of the specialized issues that may arise when closing cases. The following is a list of those issues along with a link:

    1. Carrybacks - Deficiency from Adjustment, IRM 8.20.7.3

    2. Conversions, IRM 8.20.7.4

    3. Department of Justice Cases, IRM 8.20.7.5

    4. Earned Income Credit, IRM 8.20.7.6

    5. Non-filer Returns Closed by Appeals - Delinquent Returns; Substitute for Return Cases, IRM 8.20.7.7

    6. Non-Master File Processing, IRM 8.20.7.8

    7. Non-petitioning Spouse - Assessed on MFT; Assessed on NMF; NOT Assessed Previously, IRM 8.20.7.10

    8. Premature Referrals or Improper Referrals - Jurisdiction Released; Jurisdiction Not Released, IRM 8.20.7.11

    9. Transfer of Work Units Between Areas or Between LMSB and General Appeals, IRM 8.20.7.12

8.2.1.11.2  (10-18-2007)
APS General Closing Procedures

  1. Arrange the administrative file to be sure it includes all returns, documents, and other papers which were in the case file when it was received plus any returns and papers added while Appeals had the case. Remove all documents from the left side of the case file since that is usually torn from the file once it gets to the Campus.

  2. Arrange the contents chronologically (date order).

  3. Complete Form 5403. See IRM Exhibit 8.20.7-1 for instructions on completing Form 5403.

    Note:

    If there are two or more agreements on the case, see IRM 8.20.7.2, Form 5403 When There Are Two Agreements.

  4. Complete the bottom half of Form 2285, Concurrent Determinations of Deficiencies and Overassessments in Cases Involving Restricted Interest Provisions of the Internal Revenue Code, when appropriate. Form 2285 is needed for cases involving carry backs to prior years and on some cases where the IDRS modules are restricted (with Transaction Code 340). The TCS function completes the top portion of the form, and APS is responsible for completing the bottom half.

  5. Remove duplicate material intended for retention by Appeals.

  6. Verify the agreement form, settlement computation and Form 5403 all have the same:

    • tax

    • penalty

    • TIN

    • tax period

    • name

  7. Date and verify signatures on Form 5402.

  8. Ensure there are sufficient copies of Form 5402 or other transmittal, and mark each copy for transmittal to the designated persons. Follow local office procedures for distribution. Generally the distribution of the Form 5402 is:

    1. original Form 5402 remains in the administrative file

    2. copy of Form 5402 is kept in the closed office file

    3. copy of Form 5402 is returned to the office that originally worked the case (Examination, Collection, EP, EO). If the case is an employment tax case that originated in Collection, send the copy directly to the Employment Tax Examination (ETE) Coordinator, Collection, for your respective local office.

      Note:

      Follow local procedures for Campus cases.

  9. Place all tax returns in the administrative file. Where local procedures apply, attach an assessment label to the return showing the amount of the deficiency or overassessment.

  10. Follow local office procedures for forwarding a copy of the return and the settlement computation to the State Tax Office. The Disclosure Office has information on the agreement reached between the State agency and the IRS.

  11. If it is local procedure to use Form 5403 or Form 5570 as a follow-up control, place of copy of the form in the follow-up file.

8.2.1.11.3  (10-18-2007)
Assembly of the Administrative File

  1. Below is a list of forms prepared in different cases. These forms are not prepared in every case. The following guidance is provided for handling these forms.

    1. Agreement Forms with AD Extensions ( Form 870-AD, Form 2504-AD, etc) – Send a copy of the agreement form to the taxpayer with the closing letter. Fasten the original agreement to the administrative file. Keep a copy in the closed file.

    2. Form 5403 - Attach Form 5403, the Form 5403 instructions, and the IDRS transcripts on top of the fastened material in the administrative file.

    3. Form 2285 (for Restricted Interest) - Attach original form to reverse side of the front page of return. Keep a copy including all the computations in the closed office file.

    4. Form 1331 or Form 1331-B, Notice of Adjustment - Attach the original to Form 5403. Keep a copy in the closed office file.

    5. Form 885-F, Self-Employment Tax Adjustment - Attach behind the return or to the face of the return.

    6. Form 885-T, Adjustment of Social Security Tax on Tip Income Not Reported to Employer - Attach behind the return.

    7. Form 6674, Statistical Sampling Examination Report - The AO and the ATM complete Part III. Attach one copy of the Form 6674 to the ACM and return it to Exam. The other copy remains in the closed file for local use.

    8. Form 6809, Civil Fraud Penalty Report - The AO completes Form 6809 with Appeals results. Attach the original to the Form 5402 and send to Exam. Keep a copy in the closed office file.

    9. Form 866 and Form 906 (Closing Agreements) - Attach a copy of the closing agreement to each return. Include a copy with the closing letter. Keep a copy in the closed office file. Send a copy to Examination for follow-up, if noted on Form 5402.

8.2.1.12  (10-18-2007)
Closing Reference Returns

  1. Returns associated with protested or petitioned cases for information purposes only (no proposed dollar adjustment), are "reference" returns. These reference returns include Form 1120-S and Form 1065.

  2. Reference returns are controlled on AIMS in status 80.

  3. Although reference returns controlled on AIMS are generally in status 80, there may be older inventory still in status 86 which may (other than return Form 1120-S and Form 1065) be closed using Form 5570, Appeals Short Closings. All non-taxable returns Form 1120–S and Form 1065 must be closed using Form 5403 in order to provide information in Items 802/805 on the Form 5403.

  4. If Examination closes the reference returns off AIMS prior to sending the case to Appeals, Appeals requests the AIMS database from Examination.

  5. Close reference returns from ACDS using CLOSINGCD 45.

8.2.1.13  (10-18-2007)
Closing Letter

  1. A closing letter is sent to notify taxpayers that Appeals has taken final closing actions on their case. At the time of closing, date the closing letter addressed to the taxpayer and distribute it as follows:

    1. Mail the original and one copy to the taxpayer and/or representative as indicated on the Power of Attorney. If there is no Power of Attorney, mail the original to the taxpayer.

    2. File one copy in the office file.

    3. Fasten one copy in the administrative file.

8.2.1.14  (10-18-2007)
Statute Open with Form 872-A

  1. If the statute is open under a Form 872-Aand the return is closed no-change, prepare a Form 872-T and send it to the taxpayer with the closing letter.

  2. Exercise caution prior to sending a Form 872-Ton a no change case. You must ensure that any carryback years with statutes controlled by the originating year Form 872-A have been protected or assessed. The statute date for any carryback returns open under an originating year 872-A is 90 days from the date the Form 872-T is mailed.

8.2.1.15  (10-18-2007)
Computer Disks in the Case File

  1. In cases where the examiner elected to use a computer to create electronic work papers, RAR, etc., follow local procedures regarding the disposition of the disk. This may include:

    1. Returning the disk to Exam for recycling

    2. Recycling the disk in Appeals

  2. Appeals will make no changes to the original data disk. If a case is returned to Examination for further development, include the original data disk in the case file.

8.2.1.16  (10-18-2007)
Closed Office Files

  1. If the following documents were prepared, keep a copy in the closed office file:

    • Case Activity Record

    • Form 5402

    • ACM

    • Settlement Computation

    • Agreement Form

    • Forms 5403, 5570, 9120 or 3870

    • Form 2285

    • Closing Agreement

    • Closing letter

    • Form 872-T and letter

8.2.1.17  (10-18-2007)
Closing the Case on ACDS

  1. Select "Close All Cases in WUNO" . However, if all cases in the work unit are not being closed, select "Closings Update."

  2. Select the case to be closed.

  3. Update the following fields if they are active (not greyed out)

    1. CLOSINGCD -

        Pre-90 (non–docketed) Closing Codes
      Closing Code Description
      03 Agreed Pre-Ninety
      04 a) Agreed Notice of Deficiency
      b) non-filer case where the agreement constitutes the delinquent return
      05 Defaulted Notice or Determination letter
      14 Campus Claim Fully Disallowed/Penalty Appeal Fully Sustained
      15 Campus Claim Fully Allowed/Penalty Appeal Fully Abated
      16 Campus Claim Partially Allowed/Penalty Appeals Partially Abated
      20 Premature Referral
      30 Transfer
      40 Re-assignment
      45 Reference return closing (TYPE = REF)
      98 Reject Corrected and closed
      99 Case removed (erroneously established on ACDS)

    2. DATECLSD – Date case is closed

    3. ACAPDATE – Date Appeals Team Manager or Team Case Leader approved case (signed 5402).

    4. ACTION – ACKCLS

    5. TODATE – Date case is closed

    6. FROMDATE - With the exception of premature referrals, the Tax Examiner (TE) does the final closing (assessment) on Pre-90-Day income tax cases so input the FROMDATE and the TODATE at the same time.

    7. STATDATE – statute date

    8. CODE – statute code

    9. P – Paycode (See table below)

      Pay Code Explanation
      1 Full Paid
      2 No payment made and payment was required