8.4.1  Procedures for Processing and Settling Docketed Cases (Cont. 1)

8.4.1.18 
Preparing Settlement Computations on Docketed Cases

8.4.1.18.3  (08-09-2011)
Other Carryback Claims Not Allowed in Docketed Settlement Computations

  1. When a carryback is not allowed by Appeals or Counsel in a docketed case and the starting point for the settlement computation is the return:

    1. Do not use net operating loss and capital loss carrybacks from the year giving rise to the claim for credit or refund to decrease taxable income or alternative minimum taxable income.

    2. Do not use credit carrybacks to decrease tax liability.

    3. The "Tax per return or as previously adjusted" amount on Form 5278, Form 4549, etc. must include the decrease in tax attributable to the claim for credit or refund (TC 291 or TC 299).

  2. A carryback claim for credit or refund should not be ignored in a statutory notice of deficiency. However, a claim could have been filed after a notice was issued or an error made when the notice was prepared that caused the claim to be inadvertently ignored in the notice.

  3. When a carryback is not allowed by Appeals or Counsel in a docketed case and the starting point for the settlement computation is the statutory notice of deficiency where the claim for credit or refund is ignored in the notice, see discussion below:.

    1. A recapture of the claim for credit or refund is needed.

    2. Normally an adjustment to taxable income would not be necessary but the "tax per return or as previously adjusted" amount in the settlement computation must include the TC 291 or TC 299 from the carryback claim. This automatically creates a recapture that is reflected in the bottom line deficiency or overassessment amount of the settlement computation.

  4. When a carryback is not allowed by Appeals or Counsel in a docketed case and the starting point for the settlement computation is the statutory notice of deficiency where the claim for credit or refund is included in the notice:

    1. An adjustment to taxable income may be needed to eliminate the carryback from the computation. No adjustment to taxable income will be needed if only a credit carryback was allowed in the notice. However, if a loss carryback was included in the notice, then an adjustment to taxable income will be needed to eliminate the loss from the computation.

    2. Credit carrybacks that are not allowed should not be used to decrease tax liability.

    3. The "Tax per return or as previously adjusted" amount on the settlement computation must include the TC 291 or TC 299 from the carryback claim.

8.4.1.18.4  (08-09-2011)
Procedures for Computations on Separate to Joint Returns: Non-filers

  1. If a taxpayer-husband and taxpayer-wife file an original return prior to submission of a case to court for decision, they will be allowed joint rates:

    1. If they have not previously filed separate returns, and

    2. The joint return is filed before entry of a decision by the Tax Court in the deficiency case.

  2. If the joint return is filed after submission of a case to court for decision, the joint rates will not be allowed. The preparation of a return by the Commissioner on behalf of the taxpayer under IRC 6020(b) and the issuance of a statutory notice of deficiency do not constitute a prior return of the taxpayer in determining whether a joint return election is allowable.

    Note:

    A submitted case is one that has been tried or fully stipulated and submitted to the court for opinion and decision. IRM 35.1.2, Tax Court Terms and Definitions.

8.4.1.18.4.1  (08-09-2011)
Computations When Notices of Deficiency Issued to Each Taxpayer

  1. Joint petition filed:

    1. If statutory notices of deficiency were issued to each taxpayer and they have filed a joint petition, address the settlement computation to the joint taxpayers.

    2. The starting point for adjustments can be either the taxpayer-husband's statutory notice of deficiency or zero ($ 0.00), since neither taxpayer filed a return.

    3. If using the taxpayer-husband's statutory notice as the starting point, add the taxpayer-wife's income, deductions, credits, etc., to his data.

    4. If using zero as the starting point, include taxpayer-husband and taxpayer-wife's income, deductions, credits, etc. and compute the deficiency.

  2. Separate petitions filed:

    1. If statutory notices of deficiency were issued to each taxpayer but separate petitions were filed, prepare a separate settlement computation for each petitioner.

    2. The starting point for adjustments can be either the statutory notices of deficiency or zero ($ 0.00), since neither taxpayer filed a return.

    3. The easiest method for computing the tax is to use zero as the starting point for adjustments. If using zero as the starting point, include taxpayer-husband's and taxpayer-wife's income, deductions, credits, etc. and compute the deficiency for each settlement computation using joint rates.

    4. If starting from the notices of deficiency, the taxpayer-husband's settlement computation would use the husband's statutory notice as the starting point and add the taxpayer-wife's income, deductions, credits, etc., to his data. The taxpayer-wife's settlement computation would use the wife's statutory notice as the starting point and add the taxpayer-husband's income, deductions, credits, etc., to her data.

    5. The taxpayers would be jointly and severally liable for the deficiency shown in each settlement computation. It is recommended that the following statement be added to Form 3610 of each taxpayer: "The deficiencies in income taxes and penalties are duplications of the deficiencies and penalties set forth in the case of _________ , Docket No. _______ . The petitioners in Docket Nos.________ and ________ are jointly and severally liable for said deficiencies and penalties, plus statutory interest, and the payment of the entire amount of said deficiencies and penalties, plus interest, by either petitioner, or by the petitioners jointly, will discharge the instant petitioner from liability. "

  3. Only one spouse petitions:

    1. If statutory notices of deficiency were issued to each taxpayer but only one spouse petitions, address the settlement computation to only the petitioning taxpayer. If joint rates apply, tax computation forms 5278, 4549, etc. can use the names of both taxpayers but it is recommended that Form 3610 use only the name of the petitioning taxpayer. If Form 3610 is not prepared, the names on the tax computation form should be footnoted to indicate that only one spouse petitioned.

    2. If joint rates apply, the non-petitioning spouse's income, deductions, credits, etc., can be added to the petitioning spouse's data to compute the deficiency under joint rates. If using zero as a starting point, include both spouses' income, deductions, credits, etc. and compute the deficiency using joint rates.

    3. APS will assess the deficiency against the petitioning spouse on Master File using MFT 31. Since the deficiency shown in the notice of the non-petitioning spouse has already been assessed in a separate MFT 31 account, APS will adjust the amount to reflect the corrected deficiency determined in the petitioning spouse's case.

8.4.1.18.4.2  (08-09-2011)
Computations When Notice of Deficiency Issued to One Taxpayer

  1. If a statutory notice of deficiency was issued only to one taxpayer, address the settlement computation to only the petitioning taxpayer.

    1. If joint rates apply, tax computation forms 5278, 4549, etc. can use the names of both taxpayers, but it is recommended that Form 3610 use only the name of the petitioning taxpayer. If Form 3610 is not prepared, the names on the tax computation form should be footnoted to indicate that a notice of deficiency was issued to only one taxpayer.

    2. See IRM 8.4.1.18.4.3 if the non-petitioning spouse agrees.

  2. The non-petitioning spouse's income, deductions, credits, etc., can be added to the petitioning spouse's data to compute the deficiency under joint rates.

  3. If using zero as a starting point, include both spouses' income, deductions, credits, etc. and compute the deficiency using joint rates.

  4. The assessment of the deficiency using joint rates can only be made against the petitioning spouse.

8.4.1.18.4.3  (10-01-2012)
Agreement of Non-Petitioning Spouse

  1. If a waiver is executed by the non-petitioning spouse (or some other comparable action is taken, which allows a valid assessment to be made against the non-petitioning spouse), the TCS (or ATE) can opt to address the settlement computation to both taxpayers.

  2. Regardless, APS should assess the deficiency against both taxpayers under a joint Master File account.

8.4.1.18.5  (01-06-2012)
Barred Overpayments and Deficiencies

  1. If it is determined that an overpayment or deficiency in a case is barred by statute, include special annotations on Form 3610 (or Form 5278, Form 4549, etc.) and if applicable, Form 3623. See discussion below.

  2. If the total overpayment or deficiency is barred, asterisk (*) the amount and add the following footnote to the Form 3610 and/or Form 3623:

    "Overpayment barred by statute of limitations."

  3. When the total overpayment is barred on a docketed case, completion of the bottom portion of the Form 3623 is not required.

  4. If only part of the overpayment or deficiency is barred, asterisk (*) the total amount and include a short summary of the barred amount at the bottom of the Form 3610 and/or Form 3623.

  5. The following is an example of the summary for a barred overpayment case:

    Example:

    Barred Overpayment Case:
    Overpayment 6,000.00
    Overpayment barred by statute of limitations 1,000.00
    Overpayment allowable 5,000.00
    =======

8.4.1.18.6  (03-18-2014)
Statements of Account for Docketed Cases

  1. A Statement of Account, Form 3623, may be required for a docketed case. See IRM 8.17.3, Preparing a Statement of Account, for details on when a statement of account is required, and how to request or prepare one.

8.4.1.19  (10-26-2007)
Determining if Refund is Allowed on Docketed Overpayment Cases - Non-Filing Taxpayers

  1. IRC 6512 governs overpayments allowable by the Tax Court. For tax years ending before 8/6/97, IRC 6512(b)(3)(B) and IRC 6511 entitle a taxpayer who does not file a return to receive a refund of taxes paid within two years prior to the date of the mailing of the notice of deficiency.

  2. For tax years ending before 8/6/1997, if a statutory notice is issued to a non-filing taxpayer more than two but less than three years after the due date of the return and the taxpayer petitions the Tax Court, any payments made more than two years prior to the date of the issuance of the notice of deficiency (such as withholding) are barred from refunding.

    Note:

    If the taxpayer did not petition the Tax Court, IRC 6511 governs the refund and whether it is allowable.

  3. If the taxpayer files a return after the statutory notice is issued in the situation described in (2) above, the refund is still barred even if the return is filed within three years of the due date. See Commissioner v. Lundy, 516 U.S. 235 (1996).

  4. To correct possible inequities, Congress modified IRC 6512(b)(3) in the '97 TRA:

    1. For tax years ending after 8/5/97, if a statutory notice is issued to a non-filing taxpayer more than two years but less than three years after the due date, and the taxpayer petitions the Tax Court, IRC 6512(b)(3)(B) now allows a refund of tax paid within the three year period prior to the deficiency notice.

  5. Carefully analyze the case file in all docketed cases involving overpayments where the taxpayer did not file a return, since it is possible the refund could be barred.

8.4.1.20  (10-01-2012)
Recovering Litigation Costs

  1. An award of litigation costs, attorney fees or court costs may be appropriate for docketed cases settled whether by Appeals or Counsel or decided by the Tax Court.

  2. These cases require approval by Counsel and are forwarded to them for action.

  3. These cases are not input on CASES.

  4. See IRM 8.7.15, Administrative Cost and Qualified Offer Cases.

8.4.1.21  (08-09-2011)
Interim Assessments for Docketed Cases

  1. An interim assessment is an assessment (other than a jeopardy assessment) of tax and penalty made after the issuance of the statutory notice.

  2. Examples of interim assessments include:

    1. Amounts paid by the taxpayer on the deficiency determined by the Service.

    2. A taxpayer has not filed a return before the statutory notice of deficiency was issued, later files a return after the issuance of the notice of deficiency and the Campus assesses the tax shown in the delinquent return.

    3. A taxpayer files an amended return that is assessed and then petitions Tax Court.

  3. If the interim assessment results in an overpayment, the case is closed as an overpayment case by Counsel. The TCS should prepare a normal settlement computation and remember to take the following actions:

    1. Include the interim assessment in the "Total Tax Shown on Return or as Previously Adjusted" line of Form 5278, Form 4549, etc.

    2. Footnote to show the computation of the tax as previously adjusted, as outlined in IRM 8.17.2.7, General Rules for Preparing Settlement Computations.

    3. Prepare a statement of account, Form 3623. See IRM 8.17.3, Preparing a Statement of Account, for details on preparing the statement of account.

  4. If there is a net deficiency after taking into consideration the interim assessment, the Counsel attorney must file documents that determine the deficiency before and after taking into consideration the assessment made subsequent to the mailing of the notice of deficiency. The TCS should:

    1. Follow procedures used to prepare a normal settlement computation.

    2. It is recommended, however, that the TCS modifies Form 3610 to reflect the information needed by the Counsel attorney above.

    3. Use any logical format that clearly presents the information. A suggested format is shown in Exhibit 8.4.1-1, Form 3610 and Form 5278 - Interim Assessment with Deficiency.

    4. Prepare a statement of account. See IRM 8.17.3, Preparing a Statement of Account, for details on preparing the statement of account.

8.4.1.21.1  (10-26-2007)
Advance Payment Remittances on Docketed Cases

  1. Procedures for advance payment remittances in docketed cases are the same as in non-docketed cases. Assessment may be made at any time upon a specific request from Counsel or from the taxpayer.

  2. For details on processing advance payment remittances, see IRM 8.20.6, Interim Actions, Remittances, Partials, Transfers and Returns Received by Appeals.

8.4.1.22  (10-26-2007)
Letters Used on Docketed Cases

  1. The following are some of the letters commonly used in docketed cases available in the Appeals Generator of Letters and Forms (APGolf) sub-system of ACDS:

    Letter Number Purpose of Letter
    Letter 1220 Use this letter to send settlement documents to taxpayers for review, signature and return. A Letter 1220 that includes a paragraph to provide an estimate of the total amount owed including tax, penalties and estimated interest is also available on APGolf.

    Note:

    If Letter 1220 is used, a detailed computation of the estimated interest amount must be included.

    Letter 971 Use to notify a petitioner that no settlement has been reached and that the case has been referred to Counsel for trial preparation.

8.4.1.23  (10-01-2012)
Docketed Cases Settled by Appeals - Forward Decision Documents to Counsel

  1. When the administrative file and approved Form 5402 are received for a settled case, APS will take the following actions:

    1. Examine the file to ensure that all returns, documents, and other papers are included.

    2. Place the Form 5402 with the administrative file following local procedures for copy and location requirements.

    3. Retain any remaining copies of Form 5402 in APS for distribution after Counsel notifies Appeals that the stipulation was sent to the Tax Court.

    4. Retain the administrative file in STIPFF suspense or send the administrative file to Counsel, following local procedures.

  2. APS enters action code PREPSTIP or STIPFF and the TODATE (date case placed in STIPFF suspense or sent to Counsel) on the update case/returns screen.

    • PREPSTIP is used when Appeals settles the case, but Counsel will prepare the decision document.

    • STIPFF is used when Appeals settles the case and Appeals prepares and receives the signed decision document.

  3. If the administrative file is sent to Counsel, retain the original and all copies of any Form 5403, Appeals Closing Record, until Counsel returns the file after the decision is entered by the United States Tax Court.

  4. When Counsel returns the administrative file for final closing, check 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 and Counsel had the case. Documents should be in chronological order with the most recently dated documents on top.

  5. Remove any duplicate material.

8.4.1.23.1  (10-26-2007)
Closing Agreements in Docketed Cases

  1. See IRM 8.13.1, Processing Closing Agreements in Appeals, for procedures to secure and process closing agreements in docketed cases.

  2. A closing agreement may be entered into at any time before the tax period comes within the jurisdiction of an appropriate court and may thereafter be entered into in appropriate circumstances when authorized by the court (e.g., certain bankruptcy situations). A closing agreement must not determine the amount of tax liability (or deficiency or overpayment) for any taxable period under the jurisdiction of the United States Tax Court.

8.4.1.24  (10-01-2012)
Docketed Case Not Settled by Appeals - Jurisdiction Released to Counsel

  1. When Appeals concludes docketed case consideration without settlement, forward the case to Counsel. Ordinarily a settlement computation is not required in an unagreed docketed case, however, if the ATE raises a new issue or concedes an issue, one might be necessary.

  2. When APS receives the administrative file with an approved Form 5402 releasing jurisdiction, APS will take the following actions:

    1. Examine the file to ensure that all returns, documents, and other papers are included in the folder.

    2. Date Form 5402 in the upper right corner.

    3. Date and mail the letter addressed to the petitioner or representative advising that jurisdiction has been released to Counsel.

    4. Place a copy of the letter, Form 5402 , and the appeals case memo (ACM) in the administrative file.

    5. Follow your local office copy requirements for distribution of the remaining copies of the Form 5402 and appeals case memo (ACM).

  3. For the ATE's purpose, the case is moved from active to suspense inventory (Part 2 to Part 3).

  4. Enter CLOSINGCD 43. (This closing code will move the case to Part 3/status E/T).

  5. Enter Action Code DCJUR.

  6. Enter the TODATE (date administrative file sent to Counsel).

  7. Transmit the administrative file to Counsel. If Form 2828 , Transmittal Memo, is used, establish a follow-up "tickler" control until Counsel acknowledges receipt of the administrative file.

  8. When Counsel returns the administrative file for final closing, check 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 and Counsel had the case. Documents should be in chronological order with the most recently dated documents on top.

  9. Remove any duplicate material.

8.4.1.25  (08-09-2011)
United States Tax Court Calendars for Trial Sessions

  1. The United States Tax Court (Tax Court) regularly issues calendars for trial sessions. The calendars list petitioner(s) names, case docket numbers, trial session date and location (city and state). A trial session’s calendar also lists cases in which motions are calendared for hearing at a trial session.

  2. The Tax Court posts all session schedules to its web site, http://www.ustaxcourt.gov.

  3. Tax Court judges sometimes issue orders requesting specific actions by the IRS that may impact Counsel/Appeals calendar time frames or document submissions. Appeals employees should pay particular attention to the requirements of any orders of this nature issued by a Tax Court judge.

8.4.1.25.1  (10-01-2012)
Appeals Technical Employees Attending Trial

  1. ATEs are generally present at Tax Court calendar trial sessions to consider cases amenable to settlement. Appeals' consideration is requested by Counsel or the Tax Court judge.

  2. ATEs may, with the appropriate approval, in accordance with local procedures, attend trials for cases in which they were involved.

  3. ATEs may also be permitted to attend trials for training purposes.

8.4.1.25.2  (10-01-2012)
ACDS Tax Court Calendar Program (TAXCAL)

  1. The Tax Court Calendar program (TAXCAL) is a sub-system of ACDS developed and maintained by Appeals.

  2. The ACDS Tax Court Calendar (TAXCAL) program provides Appeals offices with a method to identify and monitor Tax Court calendar cases and generate Tax Court calendar reports within ACDS.

  3. As soon as a calendar is established, Counsel provides Appeals with an electronic file for each Tax Court Calendar to upload into TAXCAL. Fresno APS is responsible for uploading all Tax Court Calendars onto TAXCAL.

  4. The ACDS Tax Court Calendar functionality is menu based and user-friendly. Based upon the permissions of the user, the program allows appropriate functionality.

  5. The ACDS permissions levels for Tax Calendar are as follows:

    1. (14000) Tax Calendar

    2. (14100) Tax Calendar, User

    3. (14200) Tax Calendar, Coordinator

    4. (14300) Import Electronic Calendar - restricted permission

  6. ACDS' web-based technology allows the program to match a docket number to any case on ACDS, in any Appeals office.

  7. A calendared case input on a Tax Court calendar created in any Appeals office will appear on the appropriate group's or ATE's report.

  8. The TAXCAL program provides the following functionality:

    • Ability to electronically import or manually create an ACDS Tax Court Calendar;

    • Matching calendar cases to ACDS cases and providing a status report for Counsel;

    • Notification to the assigned ATE when the case appears on a calendar;

    • Link on the TAXCAL record to email the calendar coordinator or assigned ATE; and

    • Ability to add comments to the TAXCAL record.

  9. Tax Court Calendars are the responsibility of both the Field Appeals and the Campus Appeals offices.

  10. A TAXCAL report listing all Dockets on the calendar in Docket Number order should be generated by the Field Appeals office and faxed to the Field Counsel responsible for the calendar within five business days of receipt of the calendar. This list shows the name of the ATE assigned to the case and if the case is unassigned or unmatched. The Field Appeals office is responsible for resolving unassigned or unmatched cases.

  11. Appeals provides Field Counsel with periodic calendar status reports. The Appeals Office responsible for the calendar generates the report monthly. These calendar status reports are generated from TAXCAL and provide the following information:

    • Name of the docketed case;

    • TIN of the docketed case;

    • Docket number;

    • Name of the ATE assigned the case, if assigned;

    • Attorney/paralegal assigned to the case as shown on ACDS;

    • Closing code and date closed, if applicable; and

    • "Status" of the case

  12. The report is forwarded to each Field Counsel responsible for the calendar. Field Counsel updates the list with the name of the attorney/paralegal assigned to the case within two workdays from the date of receipt of the list. Field Counsel delivers or faxes the list back to the Appeals office responsible for the calendar so that the ACDS database can be updated with the corrections. Subsequent lists contain those corrections.

  13. The TAXCAL Users' Manual is posted on the Appeals web site on the ACDS page.

8.4.1.26  (08-09-2011)
Recomputation Under Rule 155

  1. If the United States Tax Court requires a recomputation of tax the court will order a Rule 155 computation (the name comes from the Tax Court's Rules of Practice). Counsel emails the Rule 155 computation request to the appropriate TCS manager. The TCS manager assigns the Rule 155 computation to a TCS. Counsel delivery of the documents/administrative file needed to complete the computation will vary by the location of the Counsel office and the TCS office. Counsel may hand deliver the documents/administrative file, use interoffice mail, email or surface mail.

  2. The TCS follows the procedures found in IRM 8.17.2.12, The Rule 155 Computation Statement, to prepare the computation.

  3. Except in unusual cases, Counsel must file Rule 155 computations with the Court within 60 days from the date of the Court’s opinion. Therefore, when necessary, TCS gives priority to these computations.

  4. The TCS will use similar delivery methods outlined in (1) above to return the completed Rule 155 computation and documents/administrative file to Counsel.

  5. It is recommended that the TCS transmit administrative files to Counsel using Form 2828 , Form 3210, or similar forms, to ensure that Counsel receives and acknowledges receipt of the administrative file.

8.4.1.27  (08-09-2011)
TCS Preparation of Settlement Computation Proposed by Counsel

  1. Counsel emails the settlement computation request to the appropriate TCS manager. The TCS manager assigns the settlement computation to a TCS. Counsel delivery of the documents/administrative file needed to complete the computation will vary by the location of the Counsel office and TCS office. Counsel may hand deliver the documents/administrative file, use interoffice mail, email or surface mail.

  2. The proposed Counsel settlement computation is similar to a non-docketed case computation, detailed in IRM 8.17.2 , General Settlement and Rule 155 Computations.

  3. Form 3610 may be used as the face or summary sheet in the settlement computation. The settlement computation may omit Form 3610, provided all needed information is clearly and adequately presented in other parts of the settlement computation. (However, see the Procedures and Resources folder on the TCS Sharepoint site for a list of types of cases which may still require a Form 3610. The Sharepoint site is accessed through a link on the Appeals TCS web site.)

    1. If Counsel wants the name shown on a Form 3610 (or Form 5278, 4549, etc.) to reflect the name they are going to use on the decision documents, they should include that information on Form 3608 (in Box 12). Otherwise, the settlement computation may use whatever name is deemed appropriate to identify the taxpayer (name shown on petition, return, notice of deficiency, RAR, etc.).

    2. Enter the docket number in the appropriate block on the Form 3610. (If Form 3610 is not used, enter on Form 5278, 4549, etc.)

    3. The heading on Form 3610 may be changed from "Audit Statement" to "Counsel Settlement Audit Statement" .

  4. The TCS transmits the completed settlement computation and documents/administrative file directly to Counsel by hand delivery, interoffice mail, email or surface mail.

  5. It is recommended that the TCS transmit administrative files to Counsel using Form 2828 , Form 3210 or similar forms, to ensure that Counsel receives and acknowledges receipt of the administrative file.

8.4.1.28  (10-01-2012)
Reconsideration Cases (Closing Code 42) - Jurisdiction Returned to Appeals by Counsel

  1. Counsel and Appeals may agree jurisdiction will be returned to Appeals for settlement in a docketed case with strong likelihood of settlement for all or part of the case.

  2. The reasons for returning the case to Appeals must be well defined, preferably in writing, before Appeals accepts the work unit from Counsel.

  3. If a Campus Appeals office forwards a case to Field Counsel for "trial preparation" and, subsequently, the Petitioner or Counsel of Record wish to discuss "settlement" , presents new information or decides to settle based upon Appeals' settlement offer, Field Counsel may return case jurisdiction to Campus Appeals when all agree there is a strong possibility of settlement and the case is not on a Tax Court calendar.

  4. If the case is on a Tax Court calendar , Field Counsel may return the case to Field Appeals for reconsideration.

  5. If Counsel returns the case to Appeals for reconsideration, Appeals will accept jurisdiction of the case and the following administrative actions should be taken:

    1. APS will update the case from Part 3 to Part 2 on ACDS with input of Closing Code 42.

    2. If an AC/FR was previously input on the Case Activity Record (CAR), the ATM will input **RR to reflect the case is returned to the assigned technical employee. This will change the prior AC/FR to MS. Or, if the case needs to be reassigned to a different technical employee, the ATM will reassign and input **RR on the CAR.

    3. After reconsideration, the ATE will input AC/FR and submit the case to the ATM.

    4. The ATM will input a revised ACAPDATE and submit to APS for closing.

  6. In all cases Appeals:

    1. is responsible for any "reconsideration" activities and

    2. conducts the settlement negotiations.

    Note:

    Any docketed case originally considered by Campus Appeals but returned by Field Counsel to a Field Appeals office for reconsideration/reinstatement must be immediately routed to APS. APS will ensure that the AIMS and ACDS databases reflect the Appeals Office handling the reconsideration. APS will also ensure that ACDS is updated to Part 2 from Part 3, to properly reflect Appeals jurisdiction and to maintain Appeals statute controls.

    Note:

    Any docketed case returned by Field Counsel directly to an ATE for reconsideration/reinstatement must also be immediately rerouted to APS. APS will update ACDS to Part 2 from Part 3, to properly reflect Appeals jurisdiction and to maintain Appeals statute controls.

  7. When the case is in Counsel's jurisdiction, it is in Part 3 on ACDS. When the case is returned to Appeals for reconsideration, APS inputs Closing Code 42 and a date closed equal to the date the case is received for reconsideration. This changes the "Part" on the open ACDS record from 3 to 2. The closed ACDS record retains Part 3 and the closing information.

  8. The following procedures are followed by APS when processing the returned work units:

    1. Select the Special Activities Menu in ACDS. Then select Closing Code 42/43 update.

    2. CLOSINGCD = 42.

    3. DATECLSD = today's date.

    4. FROMDATE = date case returned from Counsel. Entering the FROMDATE will automatically remove the case from the DCJUR follow-up list.

8.4.1.29  (10-01-2012)
ACDS Updates When an Order or Decision Is Entered

  1. The Counsel Docket Room sends Appeals notification (TLCATS Transmittal) of the date a case was tried, dismissed, or stipulated.

  2. Based on the information from Counsel, APS updates the statute as follows:

    • New statute = Decision Date + 150 days (or use tack-on time when less than 60 days remains on the statute as outlined in IRM 8.21.2 , Account and Processing Support (APS) Statute Responsibility.

    • Enter the recomputed statute date on ACDS immediately and on AIMS via input of Form 5403 or command code "AMSTUB" .

  3. Enter on the update case/returns screen, the appropriate action code and TODATE representing the action taken by the Tax Court.

  4. On unagreed cases (code 185 on TLCATS transmittal), enter action code ORDENT and the date decision entered or on dismissed cases (code 660 on TLCATS transmittal), enter action code ORDENT and the date dismissed.

  5. On stipulated cases (code 190 on TLCATS transmittal), enter action code DECENT and the date the decision was entered.

8.4.1.30  (08-09-2011)
Dismissed Cases

  1. A distinction must be made between cases dismissed for lack of jurisdiction and cases dismissed for lack of prosecution.

  2. A dismissal for lack of jurisdiction is not a determination on the merits, and the Order of Dismissal does not reflect a deficiency amount.

  3. A dismissal for lack of prosecution is considered to be a final determination on the merits, and the Order of Dismissal includes a deficiency amount.

8.4.1.30.1  (10-01-2012)
Dismissed for Lack of Jurisdiction

  1. The Tax Court may dismiss a case for lack of jurisdiction for a variety of reasons such as:

    1. The petition was not filed timely,

    2. The petitioner did not pay the filing fee,

    3. A notice of deficiency or notice of determination was not issued.

  2. Generally a Tax Court dismissal for lack of jurisdiction does not favor the taxpayer, however: the dismissal can be based on circumstances that do favor the taxpayer. For example, a deficiency notice may be determined to be invalid because it was not sent to the taxpayer's last known address. The Tax Court lacks jurisdiction over a case that is based upon an invalid notice.

    1. These situations need to be handled on a case by case basis.

    2. If the statute of limitations is still open, Appeals may request that the notice of deficiency be reissued to the correct address.

  3. Each Appeals office designates an employee with responsibility for review of dismissed cases prior to assessment. In the following circumstances, the ATM considers assigning the case to an ATE and assessing an amount less than shown on the notice of deficiency:

    1. There is information in the file, not considered by the originating function, which, if considered, would have resulted in a reduction in the tax determined in the statutory notice of deficiency.

    2. The taxpayer provided information not previously available and either Area Counsel or the Tax Court requested that consideration be given to assessing a reduced amount.

    3. There is a clear misapplication of the law which led to an excessive deficiency determination in the statutory notice.

  4. Appeals will not, on its own initiative, contact taxpayers for the purpose of exploring adjustments to the amount of tax determined in the notice of deficiency prior to assessment unless circumstances favor the taxpayer (as described in paragraph (2)).

  5. As a general rule, unless unusual circumstances exist, if a taxpayer contacts Appeals and requests an adjustment after Appeals has made an assessment and closed the case, the taxpayer is advised to request an audit reconsideration with Compliance.

8.4.1.30.2  (08-09-2011)
Dismissed for Lack of Prosecution

  1. Appeals gives no further consideration to cases that are dismissed by the Tax Court for lack of prosecution.

8.4.1.30.3  (08-09-2011)
Dismissed for Lack of Jurisdiction for Assessment of Less than the Notice of Deficiency Amount

  1. Unless there is concern about an imminent statute of limitations, cases in which additional consideration results in a reduced deficiency are closed by simply assessing a reduced amount. If an imminent statute of limitations is involved, it may be necessary to assess the tax reflected in the notice of deficiency and to work the case as an informal claim for abatement.

    IF AND THEN
    Additional consideration of a case results in a reduced deficiency There is no concern about an imminent statute of limitations The case is closed by assessing a reduced amount
    Additional consideration of a case results in a reduced deficiency An imminent statute of limitations is involved It may be necessary to assess the tax reflected in the notice of deficiency and to work the case as an informal claim for abatement

  2. Charge time to the docketed workunit and when consideration of the case is complete, close the case on ACDS with the appropriate closing code.

    Closing Code Description
    08 Dismissed Compliance Area or Campus issued notice with Appeals time
    11 Dismissed for Lack of Jurisdiction and Appeals issued notice
    12 Dismissed for Lack of Prosecution and Appeals issued notice
    21 Dismissed Compliance Area or Campus issued notice with no Appeals time

8.4.1.30.4  (10-01-2012)
Closing Dismissed for Lack of Jurisdiction Cases

  1. The following APS instructions are for Tax Court dismissals that are not CDP cases.

  2. If the Order of Dismissal for Lack of Jurisdiction does not specify the tax/penalty amount to assess:

    • The APS TE should determine the reason for the dismissal. Obtain a copy of the motion to dismiss from Counsel if not in the file. The motion to dismiss indicates the reason for the dismissal.

  3. If the case was dismissed because the petition was not timely filed or because the petitioner did not pay the filing fee:

    • Check the transcript to see if the notice of deficiency/penalty is assessed.

    • If the tax/penalty on the notice of deficiency is assessed and it is a valid assessment, it does not need to be abated and re-assessed. Prepare Form 5403 for $0. Note in Item A - "Tax/penalty assessed previously on (Date)" (If case is not on AIMS, prepare Form 5402 or 3870 instead of Form 5403 and input TC 290 $0 with same note.

    • If there is an invalid assessment, it must be abated and a timely and legal assessment made.

    • If the tax/penalty on the notice of deficiency has NOT been assessed, prepare Form 5403 to make the assessment. Form 5403 should include:

    1. Item 08 -leave blank

    2. Item 12 - use the notice of deficiency for the tax/penalty amounts

    3. Item 14 - compute the statute date using tack-on-time

    4. Item 811 = 08 (if there is ATE time) or 10 (if there is no ATE time)

  4. If the case was dismissed for lack of jurisdiction because no notice of deficiency was issued:

    1. Prepare Form 3870 or Customized Form 5402 with TC 290 $0 if case is not on AIMS.

    2. Prepare Form 5403 for $0 if case is on AIMS.

      Note:

      If the Compliance case was in process and the taxpayer prematurely petitioned Tax Court, return the file and AIMS control to Examination for issuance of a notice of deficiency.

  5. Close the case on ACDS using general closing instructions. In addition: CLOSINGCD =

    1. 21 - if case is not assigned to an ATE

    2. 08 - if case was assigned to an ATE and SNTYPE = 090D or 090S

    3. 11 - if case was assigned to an ATE and SNTYPE = 090A

8.4.1.30.5  (10-01-2012)
Closing Dismissed for Lack of Prosecution Cases

  1. This type of dismissal is used when the taxpayer did not pursue their case in the manner required by the Tax Court rules and procedures, for example, failure to appear at calendar call.

  2. The Order for Dismissal for Lack of Prosecution states the tax/penalty amounts to assess.

  3. Close the case following general closing instructions. In addition, the entries for Form 5403 are:

    1. Item 08 - Leave Blank

    2. Item 12 - enter tax/penalty to be assessed

    3. Item 14 - compute the statute with tack-on-time

    4. Item 811 = 08 (if there is ATE time) or 10 (if there is no ATE time)

  4. Close ACDS using general closing instructions. In addition:

    1. 21 - if the case is not assigned to an ATE

    2. 08 - if the case was assigned to an ATE and SNTYPE = 090D or 090S

    3. 12 - if the case was assigned to an ATE and SNTYPE = 090A

8.4.1.30.6  (08-09-2011)
Cases Where Dismissal Order is Vacated

  1. There may be instances in which a taxpayer is successful in having an Order of Dismissal vacated.

  2. In these circumstances, normal appeals consideration is appropriate.

8.4.1.31  (02-01-2007)
Appeal of Tax Court Decision

  1. A Tax Court decision in a regular case can be appealed by either the petitioner or the U.S. Government. Counsel holds tried case files for 90 days after the Tax Court decision is issued. Follow the procedures below if an appeal is filed within the 90-day period.

8.4.1.31.1  (02-01-2007)
Assessment of Deficiency Determined by the Tax Court

  1. If the case goes to the Court of Appeals (Appellate Court), the deficiency determined by the Tax Court can be assessed and collected unless the petitioner files an "appeal bond" (also called a review bond) with the Tax Court. The appeal bond must be in an amount fixed by the Court on or before the time the notice of appeal is filed. No assessment is made if the bond is filed.

  2. An appeal bond is not the same as an IRC 6603 deposit discussed in IRM 8.20.6 , Interim Actions - Remittances, Partials, Transfers, and Returns. The appeal bond is an irrevocable, open-ended promise by the taxpayer to pay the tax, additions to tax, and interest determined to be due. The taxpayer will provide security for the bond, which is not posted to the taxpayer's account.

  3. The docket attorney from Counsel’s Field office has the responsibility to ensure prompt assessment of the tax, generally within 60 days after the decision of the Tax Court becomes final. Counsel will notify Appeals when the decision becomes final (after the case is finished in the Court of Appeals and/or Supreme Court). See IRM 35.9.2, Procedures for Assessment of Tax , IRM 36.1, Guiding Principles for Appeals, and IRM 36.2.6.2.1.2, Appeal Bond, for specific guidelines.

8.4.1.31.2  (02-01-2007)
Refund or Credit While Case is Pending

  1. The Internal Revenue Service Restructuring and Reform Act of 1998 (RRA 98) added IRC 6512(a)(6) and amended IRC 6512(b) to give the federal courts jurisdiction to order a refund of certain amounts while an appeal of a Tax Court decision is pending.

    1. If the Tax Court determines both an overpayment and a deficiency, the Service may refund or credit the uncontested portion of the overpayment while the appeal is pending.

    2. If the Service does not refund or credit the uncontested portion of the overpayment, the taxpayer may bring an action in Tax Court, District Court, or the United States Court of Federal Claims to recover that amount.

  2. If Appeals receives a letter from Counsel directing that an uncontested overpayment should be refunded or credited to the taxpayer, Appeals should manually process this credit or refund and retain the litigation freeze code on the taxpayer’s account unless a bond was filed as outlined below.

8.4.1.31.3  (10-01-2012)
Appeal Filed by Petitioner, Bond Filed

  1. Counsel notifies APS if a petition was filed in Appeals Court and if a bond was filed. If a bond was filed, APS will take the following actions:

    1. Enter action code APPEALED and the TODATE on the update case/returns screen. Offices that wish to further identify the case as an appealed Tax Court case may enter a local "LACTION" code and local "TODATE" .

    2. File the copy of the notification (Form 2237 or TLCATS transmittal) in a follow up file.

  2. Once the Counsel attorney receives notification that the decision has become final, he/she will notify Appeals and request an assessment.

    1. The Counsel attorney immediately delivers the administrative file to Appeals, using Form 1734 , Transmittal Memorandum, with an annotation, "Tax Court Case/Assessment must be made before [date]."

    2. The PTM is responsible for ensuring that APS requests the assessment.

    3. Follow the procedures outlined in IRM 8.4.1.30 , Dismissed Cases, above, to close the case.

    Note:

    Please refer to Exhibit 8.4.1-2, Exhibit 8.4.1-3, and Exhibit 8.4.1-4 for sample Appeal Bond Filed/Not Filed Computation Statements.

8.4.1.31.4  (01-06-2012)
Appeal Filed by Petitioner, No Bond Filed

  1. If the petitioner files a notice of appeal but does not file a bond, the tax must be assessed. Assessment should be made even if the tax is paid.

    1. The attorney contacts the PTM and immediately delivers the administrative file using Form 1734 , Transmittal Memorandum, noting, "Appealed Tax Court Case/Assessment must be made."

    2. APS is responsible for preparing Form 5403, Appeals Closing Record, and processing a partial assessment of the tax. (See IRM 8.20.6.4, Interim Adjustments (Partial Assessments/ Abatements), for preparation of Form 5403.)

    3. The earliest assessment statute is 60 days after the Tax Court decision becomes final. The Tax Court decision becomes final after the Appeals Court case (or Supreme Court case) has been completed. Therefore, a quick assessment is not necessary unless notification has been received that the Tax Court decision has become final (the IRC 6213(a) paragraph will not be on this decision so there is no agreement date).

  2. After the Form 5403 is prepared and the statute is recomputed, APS will process the administrative file as follows:

    1. Verify that the amount of deficiency and/or penalty reflected in the decision agrees with the amounts in Item 12 of Form 5403.

    2. Forward a copy of the first page of the return, together with Form 5403, for an interim assessment.

    3. If it is a master file return, prepare Form 3177 orForm 3177–A, Notice of Action for Entry on Master File, with TC 521 Closing Code 72 (which will reverse the TC 520 closing code 72 and initiate collection activity). Process Form 3177 using CC REQ77/FRM77.

    4. Enter action code INTERIM and the date sent to APS for assessment (TODATE) on the update case/returns screen.

    5. When verification is received enter the date in the FROMDATE on the update case/returns screen.

    6. Send the administrative file and verification of the assessment (transcript with posted assessment – not a pending assessment) back to Counsel for the taxpayer’s appeal. Note on the transmittal the verification of the assessment is attached and needs to be forwarded to Assistant Chief Counsel. Enter action code APPEALED and the TODATE on the update case/returns screen. On the returns screen, change the statute code from DOCKT to ASESD. Offices that wish to further identify the case as an appealed tax court case can enter a LACTION and LTODATE.

    Note:

    Please refer to Exhibit 8.4.1-2, Exhibit 8.4.1-3, and Exhibit 8.4.1-4 for sample Appeal Bond Filed/Not Filed Computation Statements.

8.4.1.32  (08-09-2011)
Docketed Cases with Unique Features

  1. The following subsections briefly cover docketed cases that contain a unique feature. Some refer to other IRM sections that cover the type of case in more detail.

8.4.1.32.1  (08-09-2011)
Docketed Appeals Team Cases

  1. Associate Area Counsel will be invited to participate in pre-conferences on all docketed team cases.

  2. For additional information on Appeals procedures for working team cases, see IRM 8.7.11, Working Appeals Team Cases.

8.4.1.32.2  (10-01-2012)
Docketed Personal Holding Company Tax Cases

  1. In cases where the liability in personal holding company tax has been established by a decision of the United States Tax Court but deficiency dividends have not been paid and a Form 976, Claim of Deficiency Dividends Deductions by a Personal Holding Company has not been filed. APS:

    1. Prepares Form 5403, Appeals Closing Record.

    2. Assesses the gross deficiency.

    3. Uses Item 31 of Form 5403 to indicate a hold code to prevent a Tax Due Notice from being sent to the taxpayer while awaiting the filing of the claim.

    4. Closes the case on ACDS.

    5. Sends the administrative file after assessment by Form 2842, Transmittal Memorandum, to the Area Office Examination function to await the filing of Form 976 by the taxpayer.

      Note:

      After verification of the claim, Examination closes the case to the SB/SE or W&I Campus according to IRM Part 4.

  2. The ATE explains to the taxpayer the actions to be taken to assess the tax and how to secure the benefits of IRC 547

8.4.1.32.3  (08-09-2011)
Docketed Joint Committee Cases

  1. Appeals is not responsible for Joint Committee reports in docketed cases under Counsel's sole jurisdiction. Such reports are prepared and processed by Counsel. Appeals furnishes Counsel additional information with respect to issues on which Appeals obtained agreement. To the extent such information can only be furnished by Compliance, Appeals will so advise Counsel.

  2. For information concerning agreed and unagreed docketed cases that require Joint Committee handling, see IRM 8.7.9, Joint Committee (JC) Cases.

8.4.1.32.4  (10-01-2012)
Docketed Cases with Claims

  1. An abatement claim filed on a docketed case will not protect the petitioner unless the issue in the claim is included in the petition.

  2. If an issue on a claim is not included in the petition, advise the petitioner to amend their pleadings to get the issue before the Tax Court.

  3. Do not secure Form 2297 or issue a notice of claim disallowance on a claim for a year docketed before the Tax Court unless the issue raised in a claim pertains to a carryback which was not put in issue before the Tax Court. In that case, secure a Form 2297 or issue a notice of claim disallowance.

  4. The ATE explains to the taxpayer what is to be done on the claim. He/she is not required to notify the taxpayer in writing of the disposition.

  5. See IRM 8.7.7, Claim and Overassessment Cases.

8.4.1.32.5  (08-09-2011)
Docketed TE/GE Cases

  1. Issues docketed under the declaratory judgment provisions of IRC 7476 or IRC 7428 are under Counsel's exclusive jurisdiction whether TE/GE or an Appeals office issued the final adverse letter that is being petitioned.

  2. Appeals does not accept cases after certified/registered adverse determination (application denied) letters are issued. Nor does Appeals accept cases that are docketed under Declaratory Judgment procedures, which are identified by the letter "X" for Exempt Organization (EO) cases and "R" for Employee Plan (EP) cases after the docket number. Such cases are under Counsel jurisdiction.

  3. See IRM 8.7.8, Tax Exempt and Government Entities (TE/GE) Cases, for additional information when a TE/GE case is docketed.

8.4.1.33  (08-09-2011)
Refund Suits and Cases Settled by Department of Justice

  1. For detailed information concerning the various types of refund suits and the different types of settlements by the Department of Justice, see IRM 8.7.1, Guidelines for Cases with Special Issues.

8.4.1.34  (10-26-2007)
Closing the Non-Petitioning Spouse Case

  1. Prior to January 1, 2001, non-petitioning spouse assessments were made on a NMF account. After January 1, 2001, non-petitioning spouse assessments were made on an MFT 31 account.

  2. The petitioning spouse will be assessed in the same manner as the non-petitioning spouse, either on the NMF account or the MFT 31 account.

  3. When a non-petitioning spouse case is received for closing, compare the amount on the decision with the amount assessed previously on NMF or MFT 31.

    1. If the amount of tax/penalty on the decision document is different from the amount assessed, prepare three (3) Forms 5403 – one for the joint account, one for the petitioning spouse, and one for the non-petitioning spouse

    2. If the amount of tax/penalty on the decision document is the same as the amount assessed previously, prepare only two (2) Forms 5403 - one for the joint account and one for the petitioning spouse.

8.4.1.34.1  (10-26-2007)
Non-Petitioning Spouse Assessed on MFT 31

  1. If the non-petitioning spouse was assessed on MFT 31, the petitioning spouse will be assessed on MFT 31 also.

  2. Prepare Form 5403 for the joint account:

    1. Check "AMCLSA"

    2. MFT = 30

    3. Item 12 = $0

    4. Item 15 – enter appropriate reference codes and amounts

    5. Items 800 through 810 – show statistical data for the entire work unit

    6. Item 811 – enter closing code based on the result of the docketed case: 08, 10, 11, 12 or 17 (See general closing instructions for closing codes)

    7. Item 42 – Enter appropriate code (was tax owed, paid, not paid or partially paid)

    8. Item A—Cross-reference to the MFT 31 assessments of both petitioning and non-petitioning spouse

  3. Prepare Form 5403 for the petitioning spouse:

    1. Check "AMCLSS"

    2. TIN = TIN of joint account

    3. MFT = 30

    4. Item 12 = tax and penalty on decision document

    5. Item 13 – enter disposal code

    6. Item 14 – enter statute date for petitioning spouse

    7. Item 15 – enter appropriate reference codes and amounts

    8. Item 800 through 811 – leave blank

    9. Item 42 – leave blank

    10. Item 56 – Check "PA" if the petitioning spouse is the primary SSN. Check "SA" if the petitioning spouse is the secondary SSN.

  4. If the tax/penalty on the decision document equals the amount assessed on the MFT 31 account, no Form 5403 will be prepared for the non-petitioning spouse.

  5. If the tax/penalty on the decision document is less than the amount assessed on the MFT 31 account BECAUSE the petitioning spouse is found to be an innocent spouse, do NOT adjust the non-petitioning spouse account. Do NOT prepare a Form 5403 for the non-petitioning spouse.

  6. If the tax/penalty on the decision document is less than the amount assessed on MFT 31, and there is NO innocent spouse issue, prepare Form 5403 for the non-petitioning spouse:

    1. Check "AMCLSS"

    2. TIN = TIN of joint account

    3. MFT = 30

    4. Item 12 = TC is 301. Circle the minus sign. The amount is the difference between the amount assessed and the amount on the decision document.

    5. Item 13 – enter disposal code

    6. Item 15 – enter appropriate reference number and amount

    7. Item 800 through 811 – leave blank

    8. Item 56 – Check "PA" if the non-petitioning spouse is the primary SSN on the joint account. Check "SA" if the non-petitioning spouse is the secondary SSN on the joint account.

  7. APS will process the adjustments in the following manner:

    1. Establish MFT 31 account for petitioning spouse. Input TC 971, AC 103, XREF TIN = petitioning spouse TIN

    2. Identify both MFT 31 accounts as having duplicate assessments. Input TC 971, AC 110 on both MFT 31 accounts.

    3. Process the AMCLSS adjustments

    4. After MFT 31 assessments/adjustments post, process AMCLSA closing for joint account.

    5. Input TC 472 on both MFT 31 accounts to start collection activity.

8.4.1.34.2  (10-26-2007)
Non-Petitioning Spouse Assessed on NMF

  1. If the non-petitioning spouse was assessed on the NMF account, the petitioning spouse will be assessed on NMF also.

  2. Prepare Form 5403 for the joint account:

    1. Check "AMCLSA"

    2. MFT = 30

    3. Item 12 = $0

    4. Items 800 through 810 – Show statistical data for the entire work unit.

    5. Item 811 – Enter closing code based on the result of the docketed case: 08, 10, 11, 12 or 17 (See Exhibit 8.20.7-1 for Form 5403 closing codes.)

    6. Item 42— Enter code appropriate for joint account.

    7. Item A—Cross-reference to NMF assessments of both petitioning and non-petitioning spouse.

  3. Prepare Form 5403 for the petitioning spouse:

    1. Check "Source Document Only"

    2. TIN = TIN of petitioning spouse with an "N"

    3. MFT = 20

    4. Item 12 = tax and penalty on decision document

    5. Item 13 – no entry

    6. Item 14 – enter statute date for petitioning spouse

    7. Item 15 – penalty amount, if any

    8. Item 800 through 811 – leave blank

    9. Item 42 – leave blank

    10. Item A – Write "Spousal Assessment" and cross reference the TIN, MFT and tax period of the non-petitioning spouse. Also write "Do Not Withhold Collection."

  4. If the tax/penalty on the decision document equals the amount assessed on the NMF account, no Form 5403 will be prepared for the non-petitioning spouse. A Form 3177 with TC 471" Resume Collection" will be sent to the NMF unit for the non-petitioning spouse.

  5. If the tax/penalty on the decision document is less than the amount assessed on the NMF account BECAUSE the petitioning spouse is found to be an innocent spouse, do NOT adjust the non-petitioning spouse account. Do NOT prepare a Form 5403 for the non-petitioning spouse. A Form 3177 with TC 471 "Resume Collection" will be sent to the NMF unit for the non-petitioning spouse.

  6. If the tax/penalty on the decision document is less than the amount assessed on the NMF account, and there is NO innocent spouse issue, prepare Form 5403 for the non-petitioning spouse:

    1. Check "Source Document Only"

    2. TIN = TIN of non-petitioning spouse with an "N"

    3. MFT = 20

    4. Item 12 = TC is 301. Circle the minus sign. The amount is the difference between the amount assessed and the amount on the decision document.

    5. Item 13 – no entry

    6. Item 15 – enter penalty, if any

    7. Item 800 through 811 – leave blank

    8. Item A – Write "Spousal Assessment – Resume Collection" and cross reference the TIN, MFT, and tax period of the petitioning spouse. The cross reference is necessary because the NMF unit must adjust the accounts each time a payment is received from either spouse. Also write "Form 1311 in process" .

    9. A Form 1331, Notice of Adjustment will be prepared to make the NMF abatement.

    10. If the NMF assessment was made at another Campus route the Form 5403 and Form 1331 directly to that Campus NMF unit OR through the Records section of the Appeals office that made the assessment with instructions to" forward to NMF Unit in your Campus" .

8.4.1.34.3  (10-26-2007)
Non-Petitioning Spouse NOT Assessed Previously

  1. If the non-petitioning spouse was NOT previously assessed and the statute on the non-petitioning spouse IS STILL open, prepare one (1) Form 5403 to make the assessment on the joint account. Use the non-petitioning spouse statute on the Form 5403 and ACDS.

  2. If the non-petitioning spouse was NOT previously assessed and the statute on the non-petitioning spouse is NOT open, follow the instructions for preparing two (2) Forms 5403 - one for the joint account and one for the petitioning spouse (MFT 31). Notify the Support Team Manager that there is a barred statute (prepare a Form 3999).

8.4.1.34.4  (10-26-2007)
Closing ACDS on Non-Petitioning Spouse Case

  1. When closing a non-petitioning spouse case on ACDS, prepare three (3) Form 5403s. The following is an example:

    Example:

    Dan and Sandra Daisy filed a joint return. A notice of deficiency for $5,000 tax was issued to both taxpayers. Dan filed a petition with Tax Court. Sandra did not file a petition and was assessed $5,000 tax as a non–petitioning spouse on MFT 31. The docketed case for Dan Daisy is now in Appeals for closing. The Decision document for Dan Daisy shows a deficiency of $2,000 tax. There were NO innocent spouse issues in this case. The deficiency for both Dan and Sandra Daisy should be $2,000.


    Prepare three (3) Form 5403s as follows:

    • Joint account for $0

    • Assess Dan Daisy $2,000 on MFT 31

    • Abate Sandra Daisy's MFT 31 account by $3,000

  2. Close the joint key case on ACDS using general closing procedures. In addition:

    1. CLOSINGCD – use the code for the docketed case: 08, 11, 12, 17, or 21.

    2. ACTION – ACKCLS

    3. PAYCODE – Enter the appropriate payment code that applies to the petitioning spouse.

    4. REVSDTAX – Enter the correct joint liability amount as reflected in the Tax Court decision or Order.

  3. Close the petitioning spouse case on ACDS:

    1. CLOSINGCD – 08, 11, 12, 17 or 21

    2. ACTION – ACKCLS

    3. STATDATE – compute new statute with tack–on time.

    4. REVSDTAX and Pen – zero (the revised tax/penalty is reflected on the joint key case).

  4. Close the non-petitioning spouse case on ACDS:

    1. CLOSINGCD – 45

    2. ACTION – ACKCLS

    3. REVSDTAX and Pen – zero (the revised tax/penalty is reflected on the joint key case)

8.4.1.35  (08-09-2011)
Procedures for Complying with the E-Discovery Rules to the Federal Rules of Civil Procedure (FRCP)

  1. Discovery refers to the pre-trial exchange of information by parties in litigation.

  2. The Federal Rules of Civil Procedure (FRCP) as amended in December 2006 clarify and establish uniform discovery processes and procedures to be used for electronically stored information (ESI).

  3. The FRCP places an obligation on the IRS to preserve ESI when litigation in federal courts is initiated or can be reasonably anticipated. Failure to preserve and provide timely discovery material can seriously jeopardize the government’s case and potentially lead to sanctions.

  4. The Tax Court adopted ESI procedures effective January 1, 2010. Counsel will follow the procedures outlined in Chief Counsel notice CC-2009-024 for District Court cases

  5. Litigants are required to:

    1. Identify relevant ESI that relates to a filed case.

    2. Preserve ESI (including meta-data).

    3. Provide electronically stored data in its native format.

    4. Respond to requests within mandated time-frames.

  6. E-Discovery requests may involve cases worked by a variety of business units, including Appeals.

  7. Requests come from Counsel to a single Appeals Tax Policy and Procedure Point of Contact (POC) that will provide guidance to affected Appeals employees. The POC will work with employees, Area Directors and Managers to ensure appropriate coordination with MITS and Counsel.

  8. ESI includes but is not limited to:

    • All email & attachments

    • Word processing documents, spreadsheets, graphics & presentation documents

    • Images, text files, text messages

    • Other information stored on hard drives or removable media (e.g. desktops and portable thumb drives)

    • Meta-data, databases

    • Instant messages, transaction logs, computer logs, audio and video files

    • Voicemail

    • Web pages

    • Backup and archived material

Exhibit 8.4.1-1 
Form 3610 and Form 5278 - Interim Assessment with Deficiency

Form 3610 and Form 5278 - Interim Assessment with Deficiency
Information for Exhibit 8.4.1-1:
  1. Form 3610 is a cover sheet for Appeals computations, used as a summary sheet in some cases as selected by Appeals personnel.

  2. Form 5278 is used for computing a taxpayer's revised tax liability.

  3. See IRM 8.4.1.21, Interim Assessments for Docketed Cases, for a discussion of interim assessments for docketed cases.

Form 3610 Information:

Form 3610 shows the deficiencies before and after the interim assessment. The Form 5278 deficiency on line 21 is after the interim assessment. See below for computation of the amount of the deficiency before the interim assessment shown on Form 3610:
  2006 2007
Total corrected tax liability 11,396 6,346
Less: Total of all assessments and abatements made before the notice of deficiency was mailed * 4,214 2,596
Deficiency before the interim assessment 7,182
======
3,750
======
* Do not include any interim assessments (assessments made after the notice of deficiency was mailed)
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Exhibit 8.4.1-2 
Computation Statement - Appeal Bond Filed – Original Deficiency Determined by the Tax Court - Not Assessed - One Year

CC:XXX:JDoe
           
COMPUTATION STATEMENT UPON REMAND
  In re:   (Name of case)  
      Petitioner's address  
     
Docket No. ___________
       
    Upon mandate of the
Court of Appeals for the Fifth Circuit
 
       
Income Tax
         
Deficiency pursuant to mandate $4,000.00
=======
 
The details supporting the above computations are set forth on attached pages _____ to _______, inclusive
           

Note:

Basically, part one of the Computation Statement in cases on remand from the Court of Appeals is the same as part one of the Computation Statement in Rule 155 cases. However, this part of the computation under mandate should show that the computation is pursuant to the mandate of the Court of Appeals, and that any deficiency or overpayment is pursuant to the mandate. This is essential since a prior decision by the Tax Court has already been entered in the case.

Exhibit 8.4.1-3 
Computation Statement - Appeal Bond Filed - Original Deficiency Determined by the Tax Court Not Assessed - Several Years Involved

CC:XXX:JDoe
           
COMPUTATION STATEMENT UPON REMAND
  In re:   (Name of case)  
      Petitioner's address  
     
Docket No. ___________
       
    Upon mandate of the Court of Appeals for the Ninth Circuit  
       
Deficiency Pursuant to Mandate
         
  Year   Income Tax   Penalty Sec. 6663(a)
  1991   $275.00   ---
  1992   5,880.50   None
  1993   30,250.80   $22,688.10
           
The details supporting the above computations are set forth on attached pages _____ to _______, inclusive
           
 
           
           
           

Exhibit 8.4.1-4 
Computation Statement - No Appeal Bond Filed - Deficiency Assessed - Overpayment - Part- Payment - Part of Prior Assessment to be Abated

CC:XXX
           
COMPUTATION STATEMENT UPON REMAND
  In re:   (Name of case)  
      Petitioner's address  
     
Docket No. ___________
       
  Upon mandate of the Court of Appeals for the Fifth Circuit
       
Income Tax
    1991    
Deficiency, without taking into consideration the assessment subsequent to the entry of the Tax Court’s decision on December 10, 1997 $5,000.00
Assessment, April, 1998 (paid) 5,000.00
Deficiency (to be assessed) None
=======
      1992    
Tax assessed and paid   $20,000.00
   Payments:        
  April 15, 1993   $15,000.00  
  May 25, 1995   5,000.00  
  Total Payments     $20,000.00
======
 
Tax liability pursuant to mandate   $18,000.00
Overpayment       $2,000.00
=======
Section 6512(b)(3)(A), Internal Revenue Code of 1986
Return filed, April 15, 1993
No claim filed
Agreements executed, March 1, 1996 and January 12, 1997 (extending statutory period indefinitely by Form 872A)
Deficiency notice mailed, February 10, 1997
           
The details supporting the above computations are set forth on attached pages _____ to _______, inclusive
           
           
           
           
           
 

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