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Part 8. Appeals

Chapter 19. Appeals Pass-Through Entity Handbook

Section 5. Processing Services (Cont. 1)

8.19.5  Processing Services (Cont. 1)

8.19.5.17  (02-08-2008)
Cases Petitioned to the U.S. Court of Federal Claims or a District Court of the United States

  1. A district court or U.S. Court of Federal Claims complaint will normally be sent to the local IRS associate area counsel office where the complaint is filed for preparation of the defense letter.

  2. Upon receipt of the petition or complaint, it is the attorney's responsibility to:

    1. Request the key case administrative file and the petitioner's return (if filed by an investor other than the TMP) following the method of authorization described in IRM 8.19.5.17.1.

    2. Verify that the petitioner has made the required deposit.

    3. Verify that no superseding Tax Court petition was timely filed. To be timely, a petition must be filed within 150 days from the date the FPAA was issued to the TMP.

    4. Verify the timeliness of the petition filed in the U.S. Court of Federal Claims or a district court. To be timely, a petition must be filed within the 150-day period after the FPAA was mailed to the TMP.

    5. Prepare the defense letter.

  3. If a valid petition is filed to one of these courts, Appeals Processing Services will prepare the Form 3210 and compile the documents needed for a TEFRA key case entity petitioned to the district court or U.S. Court of Federal Claims closing package. Appeals Processing Services will then return the case to the appeals officer. The appeals officer will review the closing package and is ultimately responsible for the accuracy and completeness of the Form 3210, including the one-year assessment date. (See IRM 8.19.5.17.3(3) for the date to use for the one-year assessment date). Appeals Processing Services will mail the closing package to the key case CTF and will notify the CTF by remark on Form 3210 to make assessments against all investors based on the adjustments in the FPAA/FSAA. On the Form 3210, Appeals Processing Services will instruct the CTF to hold the investor files at the CTF pending a final court determination and not to close the PCS linkages. See Exhibit 8.19.5-15. Appeals Processing Services will monitor the return of the Form 3210 from the CTF. If the Form 3210 is not returned by the CTF within 45 days, Appeals Processing Services will follow up with the CTF to ensure the closing package was received and that an acknowledged Form 3210 is returned by the CTF.

    1. For pass-through entity tax years ending before August 6, 1997, Appeals Processing Services will instruct CTF that penalties will not be assessed at this time.

    2. For partnership tax years ending after August 5, 1997, penalties will generally be assessed at the time the partnership items are assessed.

    3. Affected items other than penalties will not be assessed at this time.

  4. The key case administrative file will be forwarded to associate area counsel for processing to the Department of Justice.

8.19.5.17.1  (05-01-2007)
Authorization to Send Administrative File

  1. Petitions to the U.S. Court of Federal Claims and complaints to a district court may be listed on the Electronic Docket List (EDL).

  2. If there is no listing on the EDL, a copy of the first page of the petition or complaint will be accepted by Appeals Processing Services as authorization to close these cases off ACDS.

8.19.5.17.2  (05-01-2007)
Preparation of Key Case Administrative File

  1. Ensure that the following documents are prepared and are in the file before closing the case:

    1. Form 5403.

    2. Form 5402 (prepared by secretary or clerk for appeals officer). Complete Item 11 as shown in Exhibit 8.19.5-14.

    3. Appeals case memo (ACM).

    4. Penalty/affected item appeals case memo (if applicable) marked " Information Only-Do Not Mail to Taxpayer."

    5. Appeals Form 886-Z(C) with "Information Only-Do Not Mail to Taxpayer" and "FPAA" written at the top or in the center of the form.

    6. Copy of FPAA/FSAA package.

    7. Appeals Form 4605-A with "Information Only-Do Not Mail to Taxpayer" and "FPAA" written at the top or in the remarks section of the form.

    8. Copy of EDL or first page of petition/complaint.

    9. RAR Form 886-Z(C)

    10. RAR Form 4605-A

    11. Form 2828 (Transmittal Memorandum).

    12. Form 2275 (Records Request, Charge and Recharge)--recharging the key case tax return to the Justice Department.

    13. Form 3210 to key case CTF--see Exhibit 8.19.5-15.

  2. Refer to Figure 8.19.5-1 and Figure 8.19.5-2 for the number and distribution of copies.

    Figure 8.19.5-1

    Required Forms for Processing Cases to the U.S. Court of Federal Claims or a District Court of the United States

    Description Original Copies
    Form 3210 to CTF X 2
    Form 5403 X 2
    Form 5402 * X 3
    Form 4605-A * X 2
    Form 886-Z (C) * X 2
    Appeals case memo * X 3
    Form 2828 X 2
    FPAA/FSAA package   2
    EDL or first page of complaint/petition   3
    Form 2275 X 2
    Penalty report, if applicable X 2
    Small return envelope X  
         
         
    * These documents should be clearly marked "Information Only-Do Not Mail to Taxpayer."

    Figure 8.19.5-2

    Distribution of Documents

    Documents Package to CTF Administrative File Office File
    Form 3210 to CTF Original 1 copy acknowledged 1 copy acknowledged
    Form 5403   Original 1 copy
    Form 5402 1 copy Original 1 copy
    Form 4605-A 1 copy Original 1 copy
    Form 886-Z (C) 1 copy Original 1 copy
    Appeals case memo 1 copy Original 1 copy
    Form 2828   Original and 1 copy 1 copy
    FPAA/FSAA Package 1 copy Original 1 copy
    EDL or first page of complaint/petition 1 copy 1 copy 1 copy
    Form 2275   Original 1 copy
    Penalty report, if applicable 1 copy Original 1 copy
    Small return envelope 1    

8.19.5.17.3  (05-01-2007)
Package to the Key Case Campus TEFRA Function (CTF)

  1. Appeals Processing Services will transmit the closing package to the key case CTF for partial assessments whether or not the deposit was paid. On the Form 3210, Appeals Processing Services will instruct the CTF to keep the case open on PCS while awaiting the outcome of the court.

  2. Filing a petition with the U.S. Court of Federal Claims or a complaint with a district court does not trigger the one-year assessment date.

  3. For control purposes Appeals Processing Services will enter a one-year assessment date on the Form 3210 instructing the CTF to enter the one-year assessment date on PCS. For timely processing, Appeals Processing Services will use a one-year date that is 60 days after the closing package is mailed to the CTF.

    Note:

    Since the key case CTF will update the one-year assessment date, Appeals Processing Services must include this date on the Form 3210. See Exhibit 8.19.5-15.

8.19.5.17.4  (05-01-2007)
Closing the Key Case Administrative File to the Department of Justice

  1. Upon receipt of the acknowledged Form 3210 from the key case CTF, Appeals Processing Services will forward the key case administrative file to associate area counsel via Form 2828, Transmittal Memorandum. Associate area counsel will forward the file to the Justice Department.

  2. Appeals Processing Services will not update AIMS to status code 82. Instead when the case is closed to the Department of Justice, Appeals Processing Services will update the AIMS status code from status 80 to status 90.

  3. If the case is an investor in another TEFRA proceeding (a PICF 5 case), do not close AIMS. For a PICF 5 case, using CC AMSTUB, update the status to 34 and a PBC of 295 for Brookhaven or 398 for Ogden. See IRM 8.19.5.12.1(3)(b) for processing instructions. Forward the administrative file to associate area counsel.

8.19.5.17.5  (05-01-2007)
Updating ACDS

  1. Update ACDS as follows:

    1. For cases petitioned to the U.S. Court of Federal Claims, input Docket Number 99999-99C and Closing Code 18.

    2. For cases petitioned to a district court, input Docket Number 99999-99D and Closing Code 19.

    3. Closing date--enter date closed off ACDS.

    4. Notes: enter "Department of Justice--Petitioned U.S. Court of Federal Claims [or district court]."

    5. Action – ACKCLS

    6. To Date-- Date closed.

    7. Statute Date--remove any date

    8. Statute Code—DOCKT

    9. Revised Deficiency--See Exhibit 8.19.2-1

8.19.5.17.6  (05-01-2007)
Documents for Closing

  1. If the case is not a PICF 5, upon receipt of the acknowledged Form 3210 from the key case CTF, the administrative file will be closed. The following documents are needed for closing:

    1. Original Form 5402 (prepared by secretary or clerk for appeals officer).

    2. Appeals case memo.

    3. Original Form 2275.

    4. Original Form 5403, according to local procedures.

    5. Original return (copy or dummy only when the original is unavailable).

8.19.5.17.7  (05-01-2007)
Final Appeal or Final Decision

  1. The Department of Justice (DOJ) may consult with Appeals through Chief Counsel for the appeals officer to prepare (or if revised tax computations are needed, to request the tax computation specialist to begin preparing) the documents for a closing package to the CTF for closing the key case when one of the following occurs (see Exhibit 8.19.4-12):

    1. The decision of the U.S. Court of Federal Claims becomes final.

    2. The decision of the District Court becomes final.

    3. An appeal from either court becomes final.

    4. DOJ settles the case.

  2. Contact the Appeals Technical Guidance Coordinator(s) for TEFRA for assistance with the procedures for processing the case.

8.19.5.18  (05-01-2007)
Processing Investor Income Tax Cases – Appeals Processing Services

  1. An investor case may be in Appeals for consideration of a non-TEFRA issue at the same time a TEFRA proceeding is ongoing in which the investor has an investment.

  2. If the investor's return is received in Appeals for non-TEFRA issues before the TEFRA examination is started, the key case CTF should notify Appeals when the TEFRA examination is started using a Form 5546, Notification Charge Out, and/or Form 6658, Notification of Special Investor Action. See IRM 8.19.5.18.1.

  3. Appeals Processing Services will update the TYPE to TEFRAI.

  4. When Appeals receives Forms 5546 and/or 6658, Appeals Processing Services will immediately associate the forms with the investor case so that the appeals officer and appeals team manager are aware of the TEFRA examination. If the key case CTF requests a copy of the return, the appeals officer or Appeals Processing Services will promptly mail a copy to the CTF.

  5. An Appeals Office may have jurisdiction of both the TEFRA key case and the investor's return for a non-TEFRA issue. In this instance it is important to remember that the key case CTF has control of the TEFRA adjustments even though the return is in Appeals for non-TEFRA issues.

    Note:

    CIC corporation, Joint Committee and other corporate specialty investor cases are handled differently. See IRM 8.19.6.17.1.1 for Appeals Processing Services instructions for carding in TEFRA investor cases.

8.19.5.18.1  (05-01-2007)
Receipt

  1. The administrative file of the investor case will contain the documents normally found in an Appeals case. See IRM 8.20.5.2.2, Appeals Case Processing Manual. In addition, the administrative file should contain the following:

    1. Form 5546, Notification Charge Out (if the TEFRA examination has been started)

    2. Form 6658, Notification or Special Investor Action, stamped " TEFRA" (if the TEFRA examination has been started)

    3. Schedule K-1 (if the TEFRA examination has been started)

    Note:

    The file may contain either Form 5546 or Form 6658, or both forms.

  2. AIMS and ACDS processing will be handled in the same manner as a regular case.

    Note:

    CIC corporation, Joint Committee and other corporate specialty investor cases are handled differently. See IRM 8.19.6.17 for Appeals Processing Services instructions for these investor cases.

8.19.5.18.2  (05-01-2007)
Statute

  1. When both TEFRA and non-TEFRA adjustments are made to an individual return, multiple statutes of limitations may apply.

  2. The statute date on ACDS for the investor's individual tax return will be the date applicable to the non-TEFRA adjustments.

    Note:

    Appeals Processing Services must take care to safeguard both statutes for CIC corporation, Joint Committee and other corporate specialty investor cases. See IRM 8.19.6.17.1.

  3. When a case is received in Appeals, there must be at least 180 days remaining on all live one-year assessment statute dates for TEFRA investor cases which are CIC corporation, Joint Committee or other corporate specialty cases. Examination is responsible for computing and assessing the tax from all TEFRA linkages which have a live one-year assessment statute date before the case reaches Appeals for CIC corporation, Joint Committee and corporate specialty cases. The appeals team manager has discretion whether to accept an investor case with a live one-year assessment date or to return the case to Examination for computation and assessment of the live one-year assessment date before returning the case to Appeals for consideration of the non-TEFRA issues. See IRM 8.19.6.17(3) for an explanation of other corporate specialty cases.

  4. The appeals officer may extend the one-year assessment statute date for a TEFRA investor case with a Form 872-I or Form 872-IA or with modified Forms 872 or 872-A. Form 872-F may be used to extend the one-year date for a partnership item that has converted to a nonpartnership item by settlement, bankruptcy, or other events specified in IRC 6231(b). After the one-year assessment statute date is extended with one of the extension forms, the appeals officer will prepare a Form 8339 and submit it to Appeals Processing Services requesting Appeals Processing Services update the one-year assessment statute date on PCS. See Exhibit 8.19.5-16 for a sample Form 8339 or Form 8344 to update the one-year assessment statute date. Appeals Processing Services should also update the statute on ACDS. See the procedures in IRM 8.19.6.17.

  5. PCS is not programmed to accept open ended statute dates for dates more than 15 months in the future. Accordingly, the statute date on PCS will not necessarily correspond to the statute date on ACDS. The appeals officer will have to ensure the one-year statute date is updated on PCS as the one-year statute approaches.

    Example:

    If a Form 872-F is secured on 1/15/2006 extending the one-year statute date to 12/31/2007, use 3/31/2007 as the one-year statute date on PCS for this TEFRA linkage. If Form 872-IA is secured on 1/15/2006, also use 3/31/2007 as the one-year statute date on PCS for this TEFRA linkage.

8.19.5.18.3  (02-08-2008)
TEFRA Issues Settled Prior to Non-TEFRA Issues

  1. If the investor is not a CIC corporation, Joint Committee or other corporate specialty case investor, follow these procedures when the examination of the TEFRA entity is completed prior to Appeals completing action on the non-TEFRA issues.

    1. The key case CTF may request a copy of the investor's return from Appeals in order to make the tax computation on the TEFRA adjustments.

    2. The key case CTF processing function will make the TEFRA adjustments to the return of the investor if the investor is not a CIC corporation, Joint Committee or other corporate specialty investor case.

    3. The key case CTF will route a copy of Form 1902-C, Report of Individual Income Tax Changes Based on an Examination of a pass-through entity, or its equivalent to the Appeals processing team manager for the PBC of the investor on the AIMS database.

    4. The key case CTF will also route a copy of a TXMOD print showing the TC 290 posting with a priority code 2 to the Appeals processing team manager for the PBC of the investor on the AIMS database.

    5. Upon receiving the copy of Form 1902-C and the copy of the TXMOD print, the processing team manager will forward both to the appeals officer to be associated with the administrative file.

    6. In the rare instance where Appeals will assess the tax from a TEFRA linkage for an individual investor, for timely filed individual returns for taxable years ending after July 22, 1998, under IRC 6404(g) the IRS must provide adequate notice of a liability before the close of the 18-month period which begins on the later of the due date or filing date of a timely filed investor return. If adequate notice is not provided within the 18-month period, for individual investors with timely filed returns, interest is suspended from the day after the close of the 18-month period and resumes on the 21st day after the adequate notice is provided. The appeals officer will note on the Form 5402 the 6404(g) notice date and the type of 6404(g) notice for each TEFRA partnership for which Appeals will make the assessment. Appeals Processing Services will compute the restricted interest for each appropriate Appeals TEFRA assessment.

      Note:

      Effective with partnership tax years beginning after 8/5/97, under IRC 6601(c), interest on a deficiency resulting from the settlement of a TEFRA partnership is suspended 30 days after the settlement is executed and ending with the date of notice and demand. This suspension of interest under IRC 6601(c) is for settlements only. The appeals officer will note on the Form 5402 that interest suspension under IRC 6601(c) applies to the deficiency and the date the settlement was executed. Appeals Processing Services will compute the restricted interest for each appropriate Appeals TEFRA assessment.

      Caution:

      The suspension of interest on settlements is computed on a partnership by partnership basis. If the interim assessment is for more than one partnership, the interest suspension period may be different for each partnership. The appeals officer will note on the Form 5402 each partnership, the corresponding deficiency and the date the settlement agreement was executed. Contact the Appeals Technical Guidance Coordinator(s) for TEFRA for assistance if complex situations arise.

  2. If the investor is a CIC corporation, Joint Committee or other corporate specialty investor case, follow these procedures when the examination of the TEFRA entity is completed prior to Appeals completing action on the non-TEFRA issues:

    1. The key case CTF will route a copy of the TEFRA investor closing package to the Appeals processing team manager for the PBC of the investor on the AIMS database.

    2. Appeals Processing Services will establish a related non-key TEFRA partnership case summary card (CSC) on ACDS for the TEFRA linkage if not already done. See IRM 8.19.6.17.1.1 and Exhibit 8.19.6-5. Use the one-year assessment statute date as the statute date for the CSC.

    3. Appeals Processing Services will give the CTF TEFRA investor closing package documents and the related non-key TEFRA partnership CSC to the appeals officer and notify the appeals team manager.

    4. Appeals Processing Services will make interim assessments of the TEFRA adjustments as requested by an appeals team manager or appeals team case leader.

      Note:

      Effective with partnership tax years beginning after 8/5/97, under IRC 6601(c), interest on a deficiency resulting from the settlement of a TEFRA partnership is suspended 30 days after the settlement is executed and ending with the date of notice and demand. This suspension of interest under IRC 6601(c) is for settlements only. The appeals officer will note on the Form 5402 that interest suspension under IRC 6601(c) applies to the deficiency and the date the settlement was executed. Appeals Processing Services will compute the restricted interest for each appropriate Appeals TEFRA assessment.

      Caution:

      The suspension of interest on settlements is computed on a partnership by partnership basis. If the interim assessment is for more than one partnership, the interest suspension period may be different for each partnership. The appeals officer will note on the Form 5402 each partnership, the corresponding deficiency and the date the settlement agreement was executed. Contact the Appeals Technical Guidance Coordinator(s) for TEFRA for assistance if complex situations arise.

    5. Appeals Processing Services will update the one-year assessment statute date on PCS using Form 8339 or Form 8344. The Form 5402 should provide the amount of TEFRA deficiency for the Form 8339 or Form 8344. The appeals officer will attach the Form 8339 or Form 8344 to the Form 5402 requesting interim assessments of the TEFRA adjustments. The appeals officer will include instructions to Appeals Processing Services on the Form 5402 requesting Appeals Processing Services to update PCS per the attached Form 8339 or Form 8344. Local procedures determine who inputs the Form 8339 or Form 8344. See Exhibit 8.19.5-17 for a sample Form 8339.

    6. Process the adjustment using CC AMCLSF (partial), placing copies with the adjustment.

    7. After making the interim assessments of the TEFRA adjustments, Appeals Processing Services will update the one-year assessment statute date on ACDS by removing the statute date and entering "ASESD" in the "STATCD."

    8. When the non-TEFRA issues are completed, and after Appeals Processing Services makes the assessment of the non-TEFRA deficiency, Appeals Processing Services will close the related non-key TEFRA partnership case summary card on ACDS using ACDS closing code 45.

8.19.5.18.4  (05-01-2007)
Non-TEFRA Issues Settled Prior to TEFRA Issues

  1. For investor returns, which are not CIC corporation, Joint Committee or other corporate specialty investor cases, (for this purpose, other corporate specialty investor cases only include Forms 1120 with letters after the 1120 other than A, S, or X,-it does not include corporations with AIMS activity codes of 219 or higher), if it is known that a TEFRA examination is open and the related investor is ready for closing the non-TEFRA issues and the case has a PICF code of 5 on an AMDIS or AMDISA, Appeals Processing Services will prepare the forms and process the case as follows:

    1. Prepare Form 5403 following partial procedures. In Item A, Special Handling Instructions, write "TEFRA Linkage--After Partial Closing, forward to CTF."

    2. Once the partial assessment has been input, Appeals Processing Services will update the AIMS database to status 34. Appeals Processing Services will also update the PBC to 295 (for the Brookhaven CTF) or 398 (for the Ogden CTF).

    3. Prepare Form 3198, Special Handling Notice, for the investor case. In the Special Handling Section check the "Other" box and enter the following--"Related TEFRA Examination open. After partial closing, forward to CTF."

    4. If the case involves a Munro type computation, complete the "Other Instructions" area under Special Features on the Form 3198 and enter the following--"The deficiency attributable to the non-TEFRA issues was computed pursuant to the Tax Court decision in Munro v. Commissioner, 92 T.C. 71." The word "Munro" should be in red and underlined. (The appeals officer will make this determination and note on the Form 5402 "Munro."

    5. Follow the normal ACDS closing procedures using the appropriate "action," "closing codes" and " to and from dates."

    6. Forward the administrative file via Form 3210 to the CTF. Appeals Processing Services will ensure a copy of the input Form 5403 is attached to the face of the return. The CTF will place the file in suspense awaiting the outcome of the TEFRA examination.

      Note:

      Appeals Processing Services will determine the CTF to forward the case with a PICF code of 5 as follows: Order a TSINQP on each year of the key case. If the TSINQP shows OSC in the CTF-CD, then the CTF is Ogden. If the TSINQP shows BSC in the CTF-CD, then order a TXMODC on the key case. If there is data, look in the "Control Base and History Information" section; if the "Assign To" column has numbers that begin with 0179, then the CTF is Brookhaven. If there are no numbers in the "Assign to" column, then Ogden is the CTF.

  2. For CIC corporation, Joint Committee and other corporate specialty investor cases (for this purpose, other corporate specialty investor cases only include Forms 1120 with letters after the 1120 other than A, S, or X--it does not include corporations with AIMS activity codes of 219 or higher) that have a PICF code of 5, Appeals Processing Services will follow these procedures:

    1. Prepare Form 5403 following partial procedures. In item A, Special Handling Instructions, write, "TEFRA Linkage [Insert either CIC 1120, Joint Committee, or Other Specialty Case]--After Partial Closing, forward to Examination Technical Services."

    2. Once the partial assessment has been input, update the AIMS database to status 21. AIMS will reset to the closing PBC.

    3. Prepare Form 3198, Special Handling Notice, for the investor case. In the Special Handling Section check the "Other" box and enter the following--"Related TEFRA Examination open. Send to Examination Technical Services for TEFRA Suspense after partial closing."

    4. If the case involves a Munro type computation, also complete the "Other Instructions" area under Special Features on the Form 3198 and enter the following--"The deficiency attributable to the non-TEFRA issues was computed pursuant to the Tax Court decision in Munro v. Commissioner, 92 T.C. 71." The word "Munro" should be in red and underlined. The appeals officer will make this determination and note " Munro" on the Form 5402.

    5. Follow the normal ACDS closing procedures using the appropriate "action," "closing codes" and " to and from dates."

    6. Forward the administrative file via Form 3210 to the appropriate Examination Technical Services unit based on the location of the originating Examination group. Appeals Processing Services will ensure a copy of the input Form 5403 is attached to the face of the return. Examination Technical Services will forward the case to the appropriate group, who will place the file in suspense awaiting the outcome of the TEFRA examination.

8.19.5.18.5  (05-01-2007)
Non-TEFRA and TEFRA Issues Settled Together

  1. If the TEFRA and non-TEFRA issues are settled together, verify using current AIMS and TSUMY prints whether the investor has other open TEFRA linkages.

8.19.5.18.5.1  (05-01-2007)
No Other Open TEFRA Linkages

  1. If no other open linkages are found, Appeals Processing Services will process the case as a full closure.

    Note:

    Effective with partnership tax years beginning after 8/5/97, under IRC 6601(c), interest on a deficiency resulting from the settlement of a TEFRA partnership is suspended 30 days after the settlement is executed and ending with the date of notice and demand. This suspension of interest under IRC 6601(c) is for settlements only. The appeals officer will note on the Form 5402 that interest suspension under IRC 6601(c) applies to the deficiency and the date the settlement was executed. Appeals Processing Services will compute the restricted interest for each appropriate Appeals TEFRA assessment.

    Caution:

    The suspension of interest on settlements is computed on a partnership by partnership basis. If the interim assessment is for more than one partnership, the interest suspension period may be different for each partnership. The appeals officer will note on the Form 5402 each partnership, the corresponding deficiency and the date the settlement agreement was executed. Contact the Appeals Technical Guidance Coordinator(s) for assistance if complex situations arise.

  2. In the rare instance if Appeals would assess the tax from a TEFRA linkage for an individual investor, for timely filed individual taxable years ending after July 22, 1998, under IRC 6404(g) the IRS must provide adequate notice of a liability before the close of the 18-month period which begins on the later of the due date or filing date of a timely filed investor return. If adequate notice is not provided within the 18-month period, for individual investors with timely filed returns, interest is suspended from the day after the close of the 18-month period and resumes on the 21st day after the adequate notice is provided. The appeals officer will note on the Form 5402 the 6404(g) notice date and the type of 6404(g) notice for each TEFRA partnership for which Appeals will make the assessment. Appeals Processing Services will compute the restricted interest for each appropriate Appeals TEFRA assessment.

  3. Appeals Processing Services will prepare Form 5403.

    1. Mark the TSCLS box on the top of the Form 5403.

    2. Process following instructions in IRM 8.20.7.

  4. Appeals Processing Services will update PCS using Form(s) 8339 (PCS Change) prepared by the appeals officer. The appeals officer will request Appeals Processing Services to update PCS by noting on Form 5402 and attaching Form(s) 8339, using IRM 4.29.2 (Exhibits 4.29.2-4 and 4.29.2-5). See Exhibit 8.19.5-17.

    Note:

    The Form 5402 should provide the amount of TEFRA deficiency for the Form 8339.

  5. After making the interim assessments of the TEFRA adjustments, Appeals Processing Services will update the one-year assessment statute date on ACDS by removing the statute date and entering "ASESD" in the "STATCD."

  6. When the non-TEFRA issues are completed, after Appeals Processing Services makes the assessment of the non-TEFRA deficiency, Appeals Processing Services will close the related non-key TEFRA partnership case summary card on ACDS using ACDS closing code 45.

8.19.5.18.5.2  (05-01-2007)
Other TEFRA Linkages Open and Investor Is Not a CIC Corporation, Joint Committee or Other Corporate Specialty Investor Case

  1. If there are other TEFRA linkages open, and the investor is not a CIC corporation, Joint Committee or other corporate specialty investor case, (for this purpose, other corporate specialty investor cases only include Forms 1120 with letters after the 1120 other than A, S, or X--it does not include corporations with AIMS activity codes of 219 or higher), Appeals Processing Services will take the following steps:

    1. Process your adjustment using CC AMCLSF (Partial), placing copies with the adjustment.

    2. Appeals Processing Services will prepare Form 5403 following partial procedures. In Item A, Special Handling Instructions, write "TEFRA Linkage--After Partial Closing, forward to CTF."

    3. Once the partial assessment has been input, Appeals Processing Services will update the AIMS database to status 34. Appeals Processing Services will update the PBC to 295 (for the Brookhaven CTF) or 398 (for the Ogden CTF).

    4. Prepare Form 3198, Special Handling Notice, for the investor case. In the Special Handling Section check the "Other" box and enter the following--"Related TEFRA Examination open. After partial closing, forward to CTF."

    5. If the case involves a Munro computation, Appeals Processing Services will also complete the "Other Instructions" area under Special Features on the Form 3198 and enter the following--" The deficiency attributable to the non-TEFRA issues was computed pursuant to the Tax Court decision in Munro v. Commissioner, 92 T.C. 71" The word "Munro" should be in red and underlined. (The appeals officer will make this determination and note on the Form 5402 " Munro." )

    6. Follow the normal ACDS closing procedures using the appropriate "action," "closing code" and " to and from dates."

    7. Appeals Processing Services will forward the administrative file via Form 3210, to the CTF. Appeals Processing Services will ensure a copy of the input Form 5403 is attached to the face of the return. The CTF will place the file in suspense awaiting the outcome of the TEFRA examination.*

      Note:

      Appeals Processing Services will determine the CTF to forward the case with an open TEFRA linkage as follows: Order a TSINQP on each year of the key case. If the TSINQP shows OSC in the CTF-CD, then the CTF is Ogden. If the TSINQP shows BSC in the CTF-CD, then order a TXMODC on the key case. If there is data, look in the "Control Base and History Information" section; if the "Assign To" column has numbers that begin with 0179, then the CTF is Brookhaven. If there are no numbers in the " Assign to" column, then Ogden is the CTF.

    8. In the rare instance if Appeals would assess the tax from a TEFRA linkage for an individual investor, for timely filed individual taxable years ending after July 22, 1998, under IRC 6404(g) the IRS must provide adequate notice of a liability before the close of the 18-month period which begins on the later of the due date or filing date of a timely filed investor return. If adequate notice is not provided within the 18-month period, for individual investors with timely filed returns, interest is suspended from the day after the close of the 18-month period and resumes on the 21st day after the adequate notice is provided. The appeals officer will note on the Form 5402 the 6404(g) notice date and the type of 6404(g) notice for each TEFRA partnership for which Appeals will make the assessment. Appeals Processing Services will compute the restricted interest for each appropriate Appeals TEFRA assessment.

      Note:

      Effective with partnership tax years beginning after 8/5/97, under IRC 6601(c), interest on a deficiency resulting from the settlement of a TEFRA partnership is suspended 30 days after the settlement is executed and ending with the date of notice and demand. This suspension of interest under IRC 6601(c) is for settlements only. The appeals officer will note on the Form 5402 that interest suspension under IRC 6601(c) applies to the deficiency and the date the settlement was executed. Appeals Processing Services will compute the restricted interest for each appropriate Appeals TEFRA assessment.

      Caution:

      The suspension of interest on settlements is computed on a partnership by partnership basis. If the interim assessment is for more than one partnership, the interest suspension period may be different for each partnership. The appeals officer will note on the Form 5402 each partnership, the corresponding deficiency and the date the settlement agreement was executed. Contact the Appeals Technical Guidance Coordinator(s) for TEFRA for assistance if complex situations arise.

8.19.5.18.5.3  (05-01-2007)
Other TEFRA Linkages Open and Investor Is a CIC Corporation, Joint Committee or Other Corporate Specialty Investor Case

  1. If there are other TEFRA linkages open and the investor is a CIC corporation, Joint Committee or other corporate specialty investor case, (for this purpose, other corporate specialty investor cases only include Forms 1120 with letters after the 1120 other than A, S, or X--it does not include corporations with AIMS activity codes of 219 or higher), take the following steps:

    1. Process your adjustment using CC AMCLSF (Partial), placing a copy of the request with the adjustment.

    2. Prepare Form 5403 following partial procedures. In item A, Special Handling Instructions, write "TEFRA Linkage [Insert either CIC 1120, Joint Committee, or Other Specialty Case]--After Partial Closing, forward to Examination Technical Services."

    3. Once the partial assessment has been input, update the AIMS database to status 21. AIMS will reset to the closing PBC.