8.2.1  Agreed Pre-90-Day Income Tax Cases

Manual Transmittal

August 07, 2012

Purpose

(1) This transmits revised IRM 8.2.1, Pre-90-Day and 90-Day Cases, Agreed 90-Day Income Tax Cases.

Material Changes

(1) Revised IRM to reflect new organizational titles resulting from the Appeals 2012 Alignment Project.

(2) Revised 8.2.1.12.4 (3) to define the term "Fully Paid" as a case in which the tax, penalties, and interest have all been paid in full.

Effect on Other Documents

This supersedes IRM 8.2.1 dated June 28, 2012

Audience

Appeals

Effective Date

(10-01-2012)


Susan L. Latham
Director, Policy, Quality and Case Support

8.2.1.1  (06-28-2012)
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 other final 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 procedures 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 8.7.10

    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 8.7.9

    8. Transferee/Transferor - IRM 8.7.5

    9. Appeals Team Cases - IRM 8.7.11

    10. Innocent Spouse Cases - IRM 25.15.12

    11. TEFRA - IRM 8.19.6

  4. These procedures are general in nature and are intended for Appeals Processing Services Tax Examiners (TE)s and Appeals Technical Employees (ATEs). The definition of an ATE can be found in IRM 8.1.1-1, Common Terms Used in Appeals.

  5. References to Examination include the Small Business and Self Employed (SB/SE), Large Business Industry (LB&I) and Tax Exempt and Government Entities (TE/GE) groups.

8.2.1.2  (06-28-2012)
Written Protests and "Small Case Requests" in Unagreed Cases

  1. See Publication 5, Your Appeal Rights and How To Prepare a Protest If You Don’t Agree, for information on written protests and "Small Case Requests" in unagreed cases.

8.2.1.3  (10-01-2012)
Receipt of a Pre-90-Day Case - Account and Processing Support(APS)

  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; IRM 8.2.1.3.1.

    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.

8.2.1.3.1  (10-01-2012)
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 rather than requisition 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 provided 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 APS.

8.2.1.3.2  (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.

8.2.1.3.3  (06-28-2012)
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 situations 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. A work unit must have one or more cases designated as the "related case(s)."

  4. Use of key and related cases is most common when establishing petitioning and non-petitioning spouse cases or innocent spouse cases. Card-in multiple case workunits as follows:

    1. the key case, i.e. the joint return

    2. a related case, i.e. the petitioning spouse or the requesting spouse

    3. a related case, i.e., the non-petitioning spouse or the non-requesting spouse

    Note:

    For more information on carding non-petitioning spouse cases, see IRM 8.4.1. For more information on carding innocent spouse cases, see IRM 25.15.12. For information concerning establishing key and related cases for Collection cases, see IRM 8.22, IRM 8.23, IRM 8.24, and IRM 8.25.

  5. The APS TE will validate all critical data fields (CDFs) after establishing the case on ACDS. See IRM Exhibit 8.10.3-3 for the Create Validation critical data fields. Users will have the ability to access the validation screens by using "Search" , selecting a case and choosing the type of validation to be performed.

8.2.1.3.3.1  (06-28-2012)
Establishing Reference Returns on ACDS

  1. 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.

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

  3. In either situation, include the following information:

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

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

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

8.2.1.3.4  (06-28-2012)
Transferring Information from eCASE

  1. eCase allows for the electronic transfer of specific data fields to Appeals from ERCS (Examination), AOIC (Automated Offer-in Compromise) and ACS (Automated Collection System), and ICS (Integrated Collection System).

  2. The TE who requests the transfer of information from eCase must verify the data and enter additional information when necessary.

8.2.1.3.5  (06-28-2012)
Sending the New Case to the Appeals Team Manager (ATM)

  1. After carding in a new receipt on ACDS, the APS TE will complete the Create Case Validation, confirming that all information in the Original Data Field matches the source documents. If any critical data field has an error, the APS TE will:

    1. Change ACDS using the Update CDF fields

    2. Designate the change as a Normal Update (N) or Error Correction (E)

    3. Validate that the information in ACDS is now correct PRIOR to sending the case to the ATM for assignment.

  2. An ATM will not be able to assign a case if it is received without a Create Case Validation. The ATM will receive an error message, and will be prompted to contact their servicing APS unit for assistance.

  3. APS TE's must prepare an ACDS electronic Form 3210 to send a case to the ATM for assignment.

  4. APS must monitor every case that leaves APS whether for assignment, rework, etc. regardless of whether or not they are physically located in the same office.

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

  6. 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  (06-28-2012)
Receipt of New Assignment by an Appeals Technical Employee (ATE)

  1. Upon receipt, the ATE must determine whether the case is fully developed by the examiner and is ready for Appeals’ consideration.

  2. The ATE must validate all critical data fields (CDFs). See IRM 8.10.3-3 for the ATE Assignment Validation critical data fields. Users will have the ability to access the validation screens by using "Search," selecting a case and choosing the type of validation to be performed.

  3. If the case is not fully developed, it may be returned to the originating Field office for further development or other appropriate disposition. The ATE and the ATM will decide whether a non-docketed case is returned to the Field or retained in the ATE's inventory and considered on the basis of what is included in the file. 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 ATE will prepare a memo Form 5402, Appeals Transmittal and Case Memo, which is approved by the ATM, explains what additional work must be done or what necessary information is missing, and release jurisdiction back to Examination.

  5. APS must return the case and the AIMS controls using IDRS command code AMSTUB21.

  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  (06-28-2012)
Returning a Case to Examination - ATE

  1. Conduct a preliminary review as soon as possible to determine whether to return the case to the originating Examination function. Determine if the case requires further significant action or could have been disposed of without referral to Appeals, and include an explanatory memorandum citing the reason(s) why the case is being returned and the actions required. ATEs do not act as investigators or examining officers, but are not precluded from requesting additional information or evidence from a taxpayer. 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 (the grounds for such action is a substantial one and the potential effect upon the tax liability is material); See IRM 8.6.1.5 for 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. 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  (10-01-2012)
Preliminary Review of a Case - ATE

  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, the ATE identifies all Compliance Coordinated Issues (CCI), Appeals Coordinated Issues (ACI), Emerging Issues (EI) and International Issues found in IRM 8.7.3, Technical and Procedural Guidelines. It is the responsibility of the ATE to prepare and forward a referral, through their ATM, to Specialty Operations 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  (06-28-2012)
Uniform Acknowledgment Letter Procedures - ATE

  1. Generally, the ATM generates and issues Letter 4141 (CG), Uniform Acknowledgment Letter, or other approved UAL substitute (collectively referred to as UALs). 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 business days from receipt of a newly assigned case, the ATE must verify that the 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 this activity on the Case Activity Record (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 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  (06-28-2012)
Conducting the Conference - ATE

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

  2. The ATE 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 ATE 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 ATE, taxpayers, and representatives must 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, sub-offices, 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, 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 can 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  (06-28-2012)
Change of ATE After Initial Contact

  1. A taxpayer does not have the right to a conference with an ATE other than the one who is considering the case. . However, the ATM or the Appeals Area Director may authorize a change when circumstances warrant.

8.2.1.8.2  (06-28-2012)
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 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. 2012-18. Counsel cooperates 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  (06-28-2012)
Verification of New Material or Request for Further Development - ATE

  1. If 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 your conclusion, 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. The ATE will review any additional evidence provided by the taxpayer during the consideration of a case.

  3. If the new information or documentation is significant, you must give Examination the opportunity to timely review and comment. "Significant new information" is information of a non-routine nature which, in the judgment of the ATE, has an impact on the examiner's findings or changes the ATE's evaluation of the litigating hazards.

  4. 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.

  5. 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 and refer only the new issues or information to Examination for review and comment. Always provide Examination with your expected response due date

  6. 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.

8.2.1.9  (06-28-2012)
Requesting Work from Tax Computation Specialist

  1. Create a Schedule of Adjustment to identify the needed adjustments

  2. Generate Form 3608, Request for Tax Computation Specialist (TCS) Service, from APGolf.

    1. Boxes 1 through 6 - Populated with information from ACDS, when available

    2. Box 7 - Mandatory Entry. If Other include a brief description of the type of work requested.

    3. Box 8 - To be completed only when Priority Consideration is requested.

    4. Box 9 - Complete as applicable

    5. Box 10 - Identify the disposition of the case/issue.

    6. Box 11 - Completed by the ATCTM

    7. Box 12 - For use only if there are supplemental instructions to the Schedule of Adjustments

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

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

  5. 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 must send a concurrent e-mail to the ATCTM.

  6. The ATCTM will determine the grade of the case and assign it 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.

  7. 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  (06-28-2012)
Reaching a Conclusion in the Case

  1. This subsection covers actions taken by an ATE 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 they have a 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 that 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

  4. Unagreed case dispositions generally fall into three categories.

    1. Pre-90-day case disposition with a deficiency (defined in IRC 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 IRC 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 ATE will send an agreement letter, i.e. Letter 969, and enclose an agreement form and in most instances, the settlement computation. When the agreement letter used does not contain a stated interest amount, there is no requirement to include an interest computation. However if the agreement letter used, i.e. Letter 969 w/Interest, includes a stated interest amount, a detailed computation of interest must be included.

  7. IRM 8.6.4, Conference and Settlement Procedures, Reaching Settlement and Securing an Appeals Agreement Form, includes additional information concerning soliciting agreement forms.

  8. 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.

  9. Prepare the appropriate closing letter to be sent out after the reviewing official accepts the settlement proposal.

    Note:

    See subsections below for information on acceptance and rejection of the settlement proposal by the reviewing officials

    .

  10. Form and pattern letters for use as agreement letters and closing letters are contained in ACDS under APGolf (Appeals Generator of Letters and Forms).

8.2.1.10.1  (11-14-2008)
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  (06-28-2012)
Reviewing Official's Rejection of Settlement Proposal

  1. When a reviewing official rejects a settlement proposal and determines it should be more favorable to the government, the reviewing official will discuss the case with the ATE. The discussion will include the facts, law and argument the ATE considered in reaching his/her conclusion, and the position of the reviewing official. In these instances, the taxpayer has a right to a conference with either the ATE or the reviewing official.

    Note:

    In instances where the reviewing official rejects the ATE's settlement proposal and determines it should be more favorable to the taxpayer, the taxpayer is not entitled to a conference; however, a conference may be granted in order to close the case.

8.2.1.10.2.1  (06-28-2012)
Reviewing Official Rejects Settlement Proposal - ATE Accepts

  1. When the ATE accepts the reviewing official's position or when a compromise is reached, the ATE will contact the taxpayer to discuss the status of the case, the reason(s) for the change in the settlement, and their right to a conference with the ATE or the reviewing official.

  2. If requested, the ATE will hold the conference and secures all revised tax computations and agreement documents reflecting the new settlement.

  3. The ATE will maintain inventory control of the case including monitoring the statute, preparing the case for final closing, etc.

  4. The ATE will prepare a revised ACM with the revised settlement and processes the case through normal closing procedures.

8.2.1.10.2.2  (06-28-2012)
Reviewing Official Rejects Settlement Proposal - ATE Does Not Accept

  1. If the ATE does not accept the reviewing official's position, the ATE will prepare a rebuttal against making the change, that clearly states the ATE's position.

  2. The reviewing official will:

    1. contact the taxpayer, advise them of the right to a conference, and grants and holds the conference once a written request is received

    2. discuss the new settlement and the outcome of any conference with the ATE

    3. prepare an addendum to the ATE's original ACM with the facts, law and argument detailing the new settlement position, the reason(s) why the case was rejected and the outcome of the conference

    4. make the appropriate entries of his/her actions on the ATE's Case Activity Record.

    .

  3. The ATE will secure all required tax computations and agreement documents reflecting the new settlement position.

  4. The ATE will maintain inventory control of the case at all times, including monitoring the statute, preparing the case for final closure, etc.

8.2.1.11  (06-28-2012)
Closing the Case to APS

  1. The ATE will assemble the administrative file in chronological order and include all documents necessary for APS to close the case.

  2. 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.

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

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

8.2.1.11.1  (06-28-2012)
Expedite Processing for Certain Large Dollar Cases

  1. Appeals will expedite the closing of a certain "agreed and unpaid deficiency" or overpayment case, if the case meets the "large dollar" criteria described in IRM 4.4.18, Large Dollar Cases. This guidance does not apply to a deficiency and/or overpayment case that requires Joint Committee Review. See IRM 8.7.9.2.

  2. A case meets the large dollar criteria, if the total amount of a period's "agreed and unpaid deficiency" plus penalties (or overpayment plus penalties) exceeds $100,000.

  3. Expedite processing is required to accomplish the following:

    1. To avoid the unnecessary accrual of overpayment interest under IRC 6611 for "large dollar" cases.

    2. To avoid the unnecessary suspension of deficiency interest in respect to "large dollar" income, estate, gift, and/or certain excise taxes. IRC 6601(c) requires an interest suspension if notice and demand is not made within 30 days of the filing of a waiver of restriction on the assessment.

      Note:

      Interest is suspended if notice and demand is not made within 30 days of IRS' receipt of a Form 870 type agreement. If the case involves a Form 870-AD type agreement, interest is suspended if notice and demand is not made within 30 days of the execution (by the ATM or ATCL) of the special agreement form. See IRM 8.6.4.3. Agreement Forms Secured in Appeals Cases. Also, see IRM 8.7.10 to identify the excise taxes that require deficiency procedures.

  4. The following procedures apply for expediting certain "large dollar" cases:

    1. The ATE will identify and "flag" the case for expedite closing, by attaching any "expedite sticker, note, or tag" that contains a notation similar to the following:" $100,000 Agreed and Unpaid Deficiency" and/or "$100,000 overpayment" . The ATE will include a similar notation on Form 5402. The AO will close the case within five (5) calendar days of Appeals' receipt of the waiver form. The ATCL will close the case within ten (10) calendar days of the receipt of a Form 870 type agreement or within 10 days of the execution of a Form 870-AD type special agreement. The ATE should include an explanation for the delay (if any) on the case activity record (CAR).

    2. The ATM will ensure that the case is properly "flagged" for expedite processing. The ATM will close the case to APS within 10 days of the Appeals' receipt of the waiver form.

8.2.1.11.2  (06-28-2012)
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 8.4.1.32

    8. Premature Referrals or Improper Referrals - Jurisdiction Released; Jurisdiction Not Released, IRM 8.20.7.10

    9. Transfer of Work Units Between Areas, IRM 8.20.7.11

8.2.1.12  (06-28-2012)
Processing a Pre 90-Day Case - APS

  1. This section contains the procedures for APS and the general processing of a pre-90-day case and related returns and the expedited processing of certain large dollar cases.

8.2.1.12.1  (06-28-2012)
General Processing

  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.

    Form 2285. 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. However, since DMI is now used to recompute the module, APS rarely uses this part of the form.

  4. Remove duplicate material intended for retention by Appeals.

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

    • tax

    • penalty

    • TIN

    • tax period

    • name

  6. Date and verify signatures on Form 5402.

  7. 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 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.

  8. 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.

  9. 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.

  10. 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.

8.2.1.12.2  (06-28-2012)
Expedite Processing for Certain Large Dollar Cases

  1. APS will assign the case on PEAS for expedite processing, in the case of a large dollar "agreed and unpaid deficiency" or overpayment. APS will identify the number of days remaining on the 30-day period for assessing the deficiency to avoid an unnecessary suspension of interest. A quick assessment is required for an agreed deficiency in excess of $100,000

8.2.1.12.3  (06-28-2012)
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 on AIMS prior to sending the case to Appeals, APS will request the AIMS database from Examination.

  5. Close reference returns from ACDS using CLOSINGCD 45.

8.2.1.12.4  (10-01-2012)
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 ATM or Appeals Team Case Leader (ATCL) 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
      3 Partially paid
      4 Installment agreement received with payment
      5 Installment agreement received without payment
      6 Offer in Compromise received from a taxpayer instead of a payment. The offer doesn't have to be accepted, only received. Paycode 6 is never used when closing an OIC case.
      7 Payment not applicable (no change, OIC, ABINT, overassessment, etc.
      Note #1 Payment codes are entered with closing codes 3 through 19. Record whether Appeals received a payment for the tax period and the type of payment. A case is considered fully paid if the tax, penalties, and interest have all been paid in full. A case is not considered fully paid unless interest computed on the penalties is also paid.
      Note #2 If Appeals receives a payment within 90 days of closing the case, correct ACDS and AIMS. Use AMAXUA to update AIMS. If payment is received more than 90 days after the case is closed, no corrections are made.

    10. RevsdTax– revised tax

    11. Revsdpen – revised penalty

    12. DD AMTDIS – amount of claim disallowed (claim received from Examination)

    13. APPEALS AMTDIS – amount of claim disallowed (claim received from a Campus or directly from a taxpayer)

    14. Select Submit Return

    15. Select "Quit" to close another case or select "Return to Main Menu"

  4. After the TE updates the case for Closing, a Closing Validation will be required. The TE will be prompted to confirm that all original and updated data fields match the source documents. If the ACDS data is correct, the TE will select "Validate" from the screen menu and submit. ACDS will be updated in "real time." The TE will transmit the file to Collection, Exam, etc. using local guidelines.

  5. Update FROMDATE when receipt of case is acknowledged.

8.2.1.13  (06-28-2012)
Assembly of the Administrative File

  1. Below is a list of forms prepared in different cases but not necessarily 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 Worksheet , 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, including the DMI interest computation, 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 - 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 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.

8.2.1.14  (06-28-2012)
Closing Letter

  1. A closing letter is sent to notify taxpayers 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. Fasten one copy in the administrative file.

8.2.1.15  (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-T on a no change case. You must ensure carryback years with statutes controlled by the originating year Form 872-A are protected or assessed. The statute date for any carryback returns open under an originating year Form 872-A is 90 days from the date Form 872-T is mailed.

8.2.1.16  (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 Examination 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.

8.2.1.17  (06-28-2012)
Closing Documents

  1. APS will maintain original closing agreements as required by IRM 8.13.1.

8.2.1.18  (06-28-2012)
Balance Due Over $10 Million - APS

  1. For each tax period with a Balance Due of $10 Million or more, including interest and penalty, APS must follow the procedures in Examining Process - AIMS Procedures and Processing Instructions - Large Dollar CasesIRM 4.4.18.5 and send a copy of the following forms to the CFO's office:

    • Form 5402

    • ACM

    • Settlement Computation

    • Agreement or Decision Document

    • Form 2859

    • Any special instructions


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