Purpose: This IRM section describes the process and procedures for working pre-90-day income tax cases in the IRS Independent Office of Appeals (Appeals). Many of these procedures are used on every case regardless of the type of tax, assessment status, or determination involved; however, certain cases also require special procedures. See IRM 8.2.1.1.1, Background, for other IRM sections with special procedures that take precedence over general instructions found in this IRM section. Appeals receives these cases from Wage and Investment (W&I), Small Business and Self-Employed (SB/SE), Large Business and International (LB&I), and Tax Exempt and Government Entities (TE/GE).

Audience: The primary users of the IRM section are Appeals Technical Employees (ATEs); including Appeals Officers (AOs), Appeals Team Case Leaders (ATCLs) and Appeals Team Managers (ATMs).

Policy Owner: Policy, Planning, Quality and Analysis is under the Director, Case and Operations Support.

Program Owner: Appeals Policy is the program office responsible for providing technical and procedural guidance to the Appeals organization and is under the Director, Planning, Policy, Quality and Analysis.

Contact Information: Appeals employees should follow established procedures on How to Contact an Analyst. Other employees should contact the Product Content Owner shown on the Product Catalog Information page for this IRM.

Publication 5, Your Appeal Rights and How to Prepare a Protest if You Disagree, provides taxpayers with detailed information on their appeal rights if they disagree with Compliance’s determination. The taxpayer or authorized representative must submit the protest to Compliance, who is responsible for forwarding the protested case to Appeals for consideration. This publication tells taxpayers:

For Appeals’ procedures on receiving case files, see IRM 8.20.5.3.1, Receiving Returns and Administrative Files. Appeals controls its inventory on the Appeals Centralized Database System (ACDS), following procedures in IRM 8.20.3, Appeals Centralized Database System, and IRM 8.20.5, Carding New Receipts.

The ATE will take the following actions within 45 calendar days of receipt of a newly assigned and/or transferred case (i.e., date of CR/NR), except as stated in IRM 8.2.1.4.1, Exception to 45-Day Time Frame for Initial Case Actions, and IRM 8.2.1.4.2, No Initial Contact Letter Required for Certain Cases.

On the initial contact letter, the ATE identifies the specific IRS publications, IRS notices or IRS brochures enclosed with the letter. These enclosures are pre-selected based upon the category and type of case, whether the case is in docketed or non-docketed status, and whether the case is worked in campus or field operations. The selected enclosures were identified as information adding value to the taxpayer. If the ATE eliminates a pre-selected enclosure, the reason for the decision must be documented in the CAR. See Exhibit 8.6.1-1, Pre-Selected Enclosures for Initial Contact Letters Based on Category and Case Type.

The ATE will document in CARATS the enclosures sent with the initial contact letter. This documentation serves as the employee's written explanation of the procedures described in the publications or notices to the taxpayer. The following pre-selected enclosures for Appeals’ initial contact letters include the following:

Appeals will not return cases to Examination for further development.

The following circumstances, which are not all-inclusive, are grounds for returning a case:

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

During the preliminary review, the ATE identifies all Appeals Coordinated Issues (ACI), and international Issues found in IRM 8.7.3, Domestic and International Operations Programs. The ATE is responsible for preparing and forwarding a referral, through their ATM, to Technical Guidance and/or Area 11 (International) on Form 13381, Appeals Technical Guidance Referral, when the case has any of the following issues:

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

Refer all TEGE issues to the Appeals TEGE Team Manager in accordance with IRM 8.7.8 , Technical and Procedural Guidelines, Tax Exempt and Government Entities (TE/GE) Cases. TEGE cases include issues involving the following:

Appeals conference techniques are described in IRM 8.6.1 Conference and Settlement Practices, Conference and Issue Resolution.

Generate Form 3608 (CG), Request for Tax Computation Specialist (TCS) Service, from APGolf and prepare as follows:

After completing Form 3608 (CG), the ATE should select the "Submit Request" button, which automatically sends the request to the Appeals TCS Team Manager and uploads the request into the Appeals Officer’s CAR on ACDS as a case attachment.

Upload the Schedule of Adjustments to the taxpayer CAR in ACDS as a case attachment.

The Appeals TCS Team Manager receives the case to assign in the ACDS notification screen and assigns the case to a TCS.

Immediately upon TCS assignment, the TCS Appeals customer, assigned TCS and Appeals TCS Team Manager will receive a system generated notification e-mail with the contact information of the TCS assigned to the case.

The ATE can upload any additional information needed by the TCS (e.g. RAR and tax returns) to the CAR in ACDS, or as an alternate, may e-mail or E-fax it to the assigned TCS.

When the ATE fully sustains Compliance’s determination, settlement computations are not required; however, IRC 6404(g), Form 2285, Concurrent Determinations of Deficiencies, and/or May/Sequa worksheets may be required if certain interest suspension rules are applicable. Also, Form 5403 Instructions to APS Worksheet, is completed by the ATE or TCS who prepares the settlement computation. This worksheet provides specific account adjustment information for closing AIMS-controlled tax periods. APS employees use this information to prepare Form 5403, Appeals Closing Record. Notify the TCS if Form 5403 instructions, and the special interest worksheet are required. See IRM 8.17.5, Special Computation Formats, Forms and Worksheets.

ATEs must recognize the potential for the conditions in paragraph (7) and request TCS assistance to make this determination. If applicable, include the appropriate completed worksheets in the closed case file for APS to use in preparing accurate interest calculations.

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.

The authority to settle protested cases and Tax Court cases is delegated to Appeals Team Managers (ATMs) and Appeals Team Case Leaders (ATCLs) as to their respective cases. See IRM 1.2.2.9.8, Delegation Order 8-8 (Rev. 1) (formerly DO-66, Rev. 15), Authority of Appeals in Protested and Tax Court Cases.

The ATE will communicate to the taxpayer/representative that any settlement proposal is subject to the review and approval of the ATM as the reviewing official. This should be communicated and documented in the CAR when initial contact is made and when a proposed settlement is reached.

When the case is agreed, the ATE will discuss the conclusion with the taxpayer and/or representative to ensure they have a complete understanding of the effects of the settlement.

When the case is unagreed, the ATE will explain the following to the taxpayer:

Unagreed case dispositions of pre-assessed liabilities generally fall into the categories identified below:

Use Form 5402, Appeals Transmittal and Case Memorandum, to record the case conclusion, and include settlement computations (sometimes called an audit statement) and an Appeals Case Memo (ACM), when appropriate. See IRM 8.6.2, Appeals Case Memo Procedures, and IRM 8.17.2, General Settlement and Rule 155 Computations.

When an agreement is reached, the ATE will send an agreement letter, i.e., Letter 969, Agreement Form Transmittal - Non-Docketed Case, and enclose an agreement form and in most instances, the settlement computation. The ATE must enclose a detailed interest computation when the agreement letter contains a stated interest amount.

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

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. Point taxpayers to the IRS Direct Pay tool available at https://www.irs.gov/payments/direct-pay, which is a free online tool which allows individuals to securely pay their income tax directly from their checking or savings account without any fees or pre-registration. Direct Pay is available 24 hours a day, seven days a week. Any taxpayer who uses the tool receives instant confirmation that their payment was submitted. Also, if they prefer an Installment Agreement direct them to the IRS Online Payment Agreement application at https://www.irs.gov/payments/online-payment-agreement-application.

Prepare the appropriate closing letter for APS to send after the reviewing official accepts the settlement proposal.

Form and pattern letters for use as agreement letters and closing letters are contained in ACDS 2.0 or APGolf.

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

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, Appeals Managers Procedures.

After the ATM completes the "Closing Cases" on ACDS and inputs an ATM approval date known as the ACAP date, the case information automatically goes to the Processing Employee Automated System (PEAS) Unassigned box.

The ATM then submits the case to APS.

This section contains the procedures for the ATE to prepare cases that have a physical administrative paper case file for closing to APS. Paperless case files do not have a physical administrative file and are identified with a "PL" feature code. Paperless cases are closed electronically. More information on preparing the case for closure is available in IRM 8.20.7.13, Administrative File Closing Assembly Order, and in Exhibit 8.20.7-15, Assembly Order for Non-Collection Cases.

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.

Arrange the contents chronologically (date order).

Ensure there are sufficient copies of the following items in the file (or uploaded to ACDS as a case file attachment, as directed):

Place all tax returns in the administrative file.

If the statute is open under Form 872-A, Special Consent to Extend the Time to Assess Tax, and the return is closed no-change, prepare Form 872-T, Notice of Termination of Special Consent to Extend the Time to Assess Tax, for APS to send to the taxpayer with the closing letter.