8.4.1  Procedures for Processing and Settling Docketed Cases

Manual Transmittal

March 18, 2014

Purpose

(1) This transmits revised IRM 8.4.1, Appeals Docketed Cases, Procedures for Processing and Settling Docketed Cases

Material Changes

(1) The statement of account requirements have been removed from IRM 8.4.1.18.6, and a reference added instead to IRM 8.17.3, Preparing a Statement of Account. This change is necessary due to changes made in the 9/24/2013 update of IRM 8.17.3.

Effect on Other Documents

IRM 8.4.1, dated December 12, 2013, is superseded.

Audience

Appeals employees

Effective Date

(03-18-2014)


Lisa Zannitto
Acting Director, Policy, Quality and Case Support

8.4.1.1  (10-01-2012)
Introduction to Docketed Cases

  1. Rev. Proc. 87-24, 1987–1 C.B. 720, describes the procedures for handling docketed cases.

  2. Appeals strives to resolve as many docketed cases as possible prior to going to trial.

  3. This section covers the processing and settlement of docketed cases from the time they appear on the Docket Information Management System (DIMS) until the time the case is closed. (See IRM 8.4.1.6.3 for a description of DIMS).

  4. This section covers general procedures for docketed cases. More specific information may be found in IRM sections by type of docketed case.

  5. There are some unique procedures that apply solely to campus docketed cases that are covered in IRM 8.4.2, Campus Appeals "S" Docketed Cases.

  6. These procedures provide explanations and references for Tax Examiners, Appeals Technical Employees (ATE), and Tax Computation Specialists involved in processing and settling docketed cases. Appeals Technical Employee is defined in IRM 8.1.1-1, Common Terms Used in Appeals

  7. References to Examination include the Examiners in 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) groups.

  8. Refer to IRM 13.1.7, Taxpayer Advocate Service (TAS) Case Criteria, for criteria to determine when it is necessary to refer a case to Taxpayer Advocate Services (TAS), and guidelines for processing TAS cases from assignment to completion.

8.4.1.2  (08-09-2011)
Defining Docketed Cases

  1. A docketed case is a tax case assigned a docket number in the U.S. Tax Court. These cases include petitions filed in response to:

    1. Notices of Deficiency;

    2. Final Adverse Determination Letters;

    3. Final Partnership Administrative Adjustments (FPAA);

    4. Notices of Determination Concerning Your Request for Relief From Joint and Several Liability (or if the IRS failed to send any Notice of Determination with respect to a request for spousal relief submitted to the IRS at least six months ago);

    5. Notices of Determination of Worker Classification; and

    6. Notices of Determination Concerning Collection Action.

  2. A regular case is any docketed case that has not been identified as an "S" case.

  3. Taxpayers may elect to have their case conducted under the Court's simplified small tax case or "S " case procedures. Trials in "S" cases generally follow less stringent procedural and evidentiary rules and are conducted more informally. An "S" case proceeding may result in a speedier disposition. However, a decision entered in an "S" case is not subject to review in any other court and is not treated as precedent for any other case. See IRC 7463 for details.

  4. In a deficiency case, taxpayers may elect "S" case procedures when the amount of the deficiency and any additions to tax or penalties ( not including interest) in dispute is not more than $50,000 for:

    1. any one taxable year (income tax cases).

    2. the tax imposed (estate tax).

    3. any one calendar year (gift tax).

    4. any one taxable period, or, if there is no taxable period, taxable event (excise tax).

      Note:

      The amount of deficiency in dispute includes additions to the tax, additional amounts and assessable penalties as outlined in IRC Chapter 68, to the extent the Tax Court has jurisdiction.

  5. Cases that do not deal with deficiencies in dispute but may be conducted under "S" case procedures include:

    1. Innocent spouse cases in which the "amount of spousal relief sought" does not exceed $50,000 for all years combined. The Tax Court holds that the "amount of spousal relief sought" includes accrued but unassessed penalties and interest.

    2. Collection Due Process cases in which the total unpaid tax (including interest and penalties) cannot exceed $50,000 for all years combined.

    3. A worker classification case in which the amount of employment taxes in dispute cannot exceed $50,000 for any calendar quarter.

8.4.1.2.1  (08-09-2011)
Designations Identifying Types of Docketed Cases

  1. The Tax Court uses the following identification terms or letters after the docket number to designate different types of docketed cases:

    Tax Court Designation Tax Court Description
    S Small or "S" cases
    D Disclosure Actions ( IRC 6110) (with the prefix number next in order among all cases)
    L Collection Due Process Cases ( IRC 6320 and IRC 6330)
    ABATEMENT Interest Abatement Actions ( IRC 6404)
    X Exempt Organization Cases ( IRC 7428)
    EMPLOYMENT Worker Classification Cases (IRC 7436)
    R Employee Plan Cases ( IRC 7476 )
    B Governmental Obligation Actions (Bonds) ( IRC 7478)

  2. The Tax Court website case listings under the tab "docket inquiry" reflect the designated Tax Court docket number identification terms or letters. You can search cases on the Tax Court web site by docket number.

  3. The Counsel Automated Tracking System (TLCATS) is a nationwide computerized case tracking system for docketed and nondocketed cases that tracks the entire history of a case from opening through closing. TLCATS does not reflect the docket number identification terms or letters used by the Tax Court. TLCATS uses a separate letter coding system for docketed case type on TLCATS Case Screen 1.

  4. Counsel TLCATS uses the following letters after the docket number to identify different types of docketed cases:

    Counsel TLCATS Designation - Tax Court Cases Counsel TLCATS Description
    AI Abatement of Interest
    DU Due Process Collection
    W Whistleblower
    Counsel TLCATS Designation - Declaratory Judgment for Tax Court Cases Counsel TLCATS Description
    B Bond Tax Status
    D Disclosure Information
    R Retirement Plans
    T Transfer of Property Out of U.S.
    X Exempt Organization

8.4.1.3  (08-09-2011)
Jurisdiction of the Tax Court

  1. The U.S. Tax Court is a federal court of record established by Congress under Article I of the Constitution of the United States. Congress created the Tax Court to provide a judicial forum in which affected persons could dispute tax deficiencies determined by the Commissioner of Internal Revenue prior to payment of the disputed amounts.

  2. The jurisdiction of the Tax Court includes the authority to hear a variety of tax disputes. The Tax Court has jurisdiction to redetermine whether deficiencies determined by the Commissioner in notices of deficiency are correct. The Tax Court has jurisdiction over other proceedings where Congress has given specific grants of jurisdiction. In all cases, the jurisdiction of the Court also depends on the timely filing of a petition by the taxpayer.

  3. The following list describes various types of docketed cases over which the Tax Court has jurisdiction:

    Type of Case Description
    Deficiency Proceedings The Tax Court has jurisdiction to redetermine the deficiency determined by the Service. IRC sections 6211 through 6216 and IRM 8.7 cover many deficiency procedures. In a deficiency proceeding, the Court maintains jurisdiction only where the Commissioner has issued a notice of deficiency and the taxpayer filed a timely petition; or in a transferee or fiduciary proceeding, the Court maintains jurisdiction only where the Commissioner has issued a notice of liability to the transferee or fiduciary and the transferee or fiduciary has filed a timely petition.
    Declaratory Judgment The Tax Court has jurisdiction over certain types of declaratory judgments. See IRM 35.1.1.18 for additional information on the following:
    • Declaratory judgment relating to oversheltered return ( IRC 6234(c) )

    • Declaratory judgment relating to qualification of certain exempt organizations (IRC 7428)

    • Declaratory judgment relating to worker classification (IRC 7436)

    • Declaratory judgment relating to qualification of retirement plan (IRC 7476)

    • Declaratory judgment relating to gift valuation ( IRC 7477)

    • Declaratory judgment relating to government obligations ( IRC 7478)

    • Declaratory judgment relating to eligibility of an estate to make installment payments under IRC 6166 (IRC 7479)

    Disclosure Actions The Tax Court has jurisdiction over the review of disclosure actions (IRC 6110(f)(3) and IRM 11.3).
    Administrative and litigation costs The Tax Court has jurisdiction over actions for administrative costs (IRC 7430(f)(2) and IRM 8.7.1.10).
    Readjustment and adjustment of partnership items The Tax Court has jurisdiction over the readjustment and adjustment of partnership items, including:
    • Review of final partnership administrative adjustments ( IRC 6226)

    • Review where an administrative adjustment request is not allowed in full (IRC 6228)

    • Review of partnership adjustments of a large partnership ( IRC 6247)

    • Review where an administrative adjustment request is not allowed in full for a large partnership (IRC 6252)

    • Refer to IRM 8.19.3.12

    Interest Abatement The Tax Court has jurisdiction over the review of the Service's denial of a request to abate interest, or "Interest abatement claims" (IRC 6404(h) and IRM 20.2.7).
    Collection Due Process The Tax Court has jurisdiction over the review of certain lien/levy actions, or "collection due process (CDP)" cases (IRC 6320 and IRC 6330 and IRM 8.22).
    Innocent Spouse The Tax Court has jurisdiction over the review of relief from joint and several liability on a joint return, or "innocent spouse cases" (IRC 6015(e) and IRM 25.15.12.25).
    Worker classification The Tax Court has jurisdiction over the review of worker classification (IRC 7436 and IRM 4.23.16) .
    Jeopardy Assessment The Tax Court has jurisdiction to review the reasonableness and appropriateness of a jeopardy assessment where a taxpayer has already timely petitioned the Tax Court to redetermine a deficiency at the time the jeopardy assessment is made (IRC 7429(b)(2)(B) and IRM 4.15.4.3.1 and IRM 8.7.1).
    Review of sale of seized property The Tax Court has jurisdiction to review the Service's determination to sell seized property pending a decision by the Tax Court in a deficiency proceeding (IRC 6863(b)(3)(C)).
    Redetermination of interest The Tax Court has jurisdiction over the redetermination of interest on deficiencies or overpayments determined by the Tax Court ( IRC section 7481(c) ).
    Enforcement of overpayment decision The Tax Court has jurisdiction over enforcement of an overpayment decision by the Tax Court if not refunded by the Service within 120 days after the decision of the court has become final (IRC 6512(b)(2)).
    Section 6166 Interest Modification The Tax Court has jurisdiction to modify the final decision in an estate tax case to reflect interest paid pursuant to section 6166 (IRC 7481(d)).

    Note:

    For more information please see IRM 35.1.1, Tax Court Jurisdiction and Proceedings. Questions concerning Tax Court jurisdiction should be directed through the Field Counsel assigned to the case, to Associate Chief Counsel Procedure and Administration.

8.4.1.3.1  (08-09-2011)
No Deficiency and Overassessment Years in Docketed Case Work Units

  1. No deficiency and overassessment years are not subject to the Tax Court's jurisdiction.

  2. Appeals may consider a work unit containing both docketed and non-docketed years.

8.4.1.4  (10-26-2007)
Appeals Authority Over Docketed Cases

  1. Appeals has settlement authority in conjunction with Counsel over docketed cases. This authority remains in Appeals unless procedures require the case be returned to Counsel.

  2. The Office of Chief Counsel (or the Associate Chief Counsel with subject matter jurisdiction over the case or issues) may, after consulting with the Chief, Appeals and the appropriate Area Counsel, determine that a case, or an issue or issues in a case, not be considered by Appeals. In such a situation, Appeals foregoes settlement authority on the case or issues.

8.4.1.5  (10-26-2007)
Common Terms and Definitions in Docketed Cases

  1. Some Tax Court terms and definitions are described in IRM 35.1.2, Tax Court Terms and Definitions. In addition, common definitions for docketed cases include:

    Term Definition
    Acquiescence Commissioner's acceptance of a decision reached by the trial court adverse to the position of the Government. These are published in the Internal Revenue Bulletin.
    Action on Decision Chief Counsel's recommendation, if any, of action to be taken on an adverse decision.
    Cases on Remand When a case is sent back to a lower court with orders about further action.
    Decision of the Tax Court In a deficiency case, the decision of the Tax Court memorializes the Tax Court's determination of the correct amount of the deficiency, penalty, additions to tax or overpayment. A decision needs to dispose of any claims for award of attorney's fees under IRC 7430. The time to appeal a decision of the Tax Court is within 90 days after the decision is entered. A decision document closes a case. A decision is signed by a Judge and entered in the Court's record. The decision reflects the conclusions of the Court. A decision can be entered in a case after the parties have settled all issues or the Judge has issued an opinion or order deciding all issues in a case.
    Defaulted Case A case where a party fails to plead or otherwise proceed with the case as provided by the Tax Court Rules of Practice and Procedure and the Tax Court enters a decision against the defaulting party. A decision rendered upon a default operates as an adjudication on the merits.
    Dismissed Case A case where a party failed to properly prosecute or comply with the Tax Court Rules of Practice and Procedure, causing the Tax Court to enter an order of dismissal either for lack of prosecution, lack of jurisdiction or other reason. A decision rendered in consequence of a dismissal, other than a dismissal for lack of jurisdiction, operates as an adjudication on the merits.
    Legal File A file maintained by Counsel containing all legal documents pertaining to a docketed case.
    Non acquiescence Commissioner's non-acceptance of a decision reached by the Tax Court that is adverse to the position of the Government. These are published in the Internal Revenue Bulletin.
    Original Consideration Appeals' consideration of a docketed case not considered by Appeals in non-docketed status.
    Petition Taxpayer's request to the Tax Court for a redetermination of the deficiency. This is the pleading the taxpayer files with the Tax Court to initiate an action. A petition in a declaratory judgment proceeding is the pleading filed by the taxpayer or fiduciary.
    Petitioner A taxpayer or fiduciary who files a petition with the Tax Court.
    Proposed Schedule of Trial Sessions Schedule prepared by the Tax Court for each trial term. This schedule is used primarily by the Tax Court to arrange courtroom facilities.
    Reconsideration An Appeals consideration of a docketed case previously considered by Appeals in either non-docketed or docketed status.
    Respondent In a Tax Court case, the respondent is the Commissioner of Internal Revenue.
    Rule 155 Case After trial, the Tax Court renders an opinion. If the opinion requires a recomputation of tax, the Court withholds entry of its decision to permit a computation as provided by Tax Court Rule 155. An Appeals Tax Computation Specialist generally does the recomputation.
    Session Settlement Settlement effected by Counsel after the date a docketed case is set for trial or the opening date of the Pre-trial Hearing or Request Session.
    Settlement Stipulation Settlement document filed with the Tax Court. This document memorializes the settlement of:
    • a deficiency,

    • a penalty,

    • addition to tax,

    • an overpayment, or

    • some other issue agreed to by the Government and petitioner in a docketed case. Claims for attorney's fees under IRC 7430 may also be included.

    Stipulation of Facts A formal legal document filed with the Tax Court setting forth those mutually agreed statements of fact which require no proof in Court.
    Trial Calendar Tax Court's list of cases scheduled for trial at a certain time and place. The trial calendar is issued several months before the opening date of the trial session.
    Trial Calendar Period The period beginning with the issuance of the calendar and ending on the opening day of the session.
    Trial Terms The three time periods into which the Tax Court divides the fiscal year for trial sessions of the court. The three terms are:
    • Fall Term - 12 weeks beginning in September,

    • Winter Term - 9 weeks beginning in January, and

    • Spring Term - 9 weeks beginning in April.

    Trial Session Actual time the Tax Court sits and hears cases during a term.

8.4.1.6  (10-01-2012)
Docket List

  1. The Docket List is a list of cases docketed by U.S. Tax Court. The list is prepared by Counsel after the Tax Court serves the taxpayer's petition(s) to the Commissioner. Counsel emails the list as an attachment to employees in various Operating Divisions/functions who are members of an email distribution list maintained by Counsel. The list is used as a tool to help source functions determine if a case is docketed.

  2. The hard-copy Docket List shows:

    • Docket List Number

    • Date List Prepared (by Counsel)

    • Date Petition Served (on IRS)

    • Docket number(s)

    • Notice Date (date of notice of deficiency or other determination letter or notice)

    • Taxpayer(s) name, address, and TIN(s)

    • Year(s) petitioned

    • Signed by Both? (Y, N or Blank)

    • Postmark (Date or Blank)

    • Source of Notice (If known. Where no deficiency notice is attached to the petition, the source is listed as unknown.)

    • Appeals Office

    • Counsel Office

  3. In addition to creating and distributing the hard-copy Docket List by email, Counsel also posts the Docket List as a file to a server. Appeals downloads the Docket List file from the server and posts it on its automated system, "Docket Information Management System (DIMS)" , a sub-system of the Appeals Centralized Database System (ACDS). DIMS is used in lieu of the hard-copy Docket List.

  4. After the electronic file from Counsel is posted to DIMS, users are able to print either the entire list or sort the list so that it contains only the cases they control or need to locate.

  5. The automated DIMS system is available to both Appeals and non-Appeals employees responsible for issuing and monitoring notices or letters describing Tax Court rights.

  6. Access to DIMS is obtained through the Online 5081 process.

  7. Account and Processing Support (APS) uses DIMS to monitor the Docket List. IRM 8.4.1.6.3., Docket Information Management System (DIMS).

8.4.1.6.1  (08-09-2011)
Docket List Responsibilities

  1. Operating Divisions and functions that issue notices of deficiency, notices of determination, or any other letter or notice with United States Tax Court rights are responsible for monitoring the Docket List to determine if a petition is filed in response to a letter or notice they issued.

  2. If a petition is filed, the case must be located, processed for closing and transmitted to Appeals within ten (10) calendar days from receipt of the Docket List.

  3. The U.S. Tax Court requires the filing of an "answer" by the Commissioner of Internal Revenue in all docketed tax cases.

  4. Employees responsible for monitoring the Docket List must be aware of and take all necessary actions to ensure Counsel receives docketed administrative files with sufficient time remaining to meet the due date established by the U.S. Tax Court to answer the petition.

  5. The "answer due date" , or the time within which the petition must be answered, is set by the Tax Court at sixty (60) days from the date the petition is served on the IRS. The answer due date for "S" case petitions is the same as it is for regular tax case petitions.

    Note:

    The answer due date is clearly identified on the TLCATS Case Screen 1 in the "Answer Due Date" field.

  6. Counsel needs time to prepare its answer, therefore APS must make every effort to card the administrative file and send it to Counsel via a mail delivery system that ensures it is received in Counsel no later than twenty (20) days prior to the answer due date.

  7. A taxpayer may send supporting documentation to business units in response to a Statutory Notice of Deficiency. At times the business unit accepts the information and "no changes" the case. In a streamlined process, the business unit will send (via fax or email) a signed Form 14121, No Change Certification, to the Field Counsel attorney assigned the case and the Fresno DIMS unit. The business unit certifies that it has reviewed the documentation and that no changes are needed to the return as filed. The "Docketed No Change Certification" procedure:

    1. Enables the business units to close their case and avoid retrieving and sending the administrative file to Appeals/Counsel,

    2. Notifies the Fresno DIMS unit that the administrative file is not needed, stopping efforts to retrieve the file and ensuring proper closure of the case on DIMS and

    3. Provides Counsel with sufficient information to concede the case on answer.

8.4.1.6.2  (10-26-2007)
Time Line From Date Petition Served to Answer Due Date

  1. The following table provides a time line for various actions required, beginning on the day the petition is served on the IRS.

    DAY ACTION REQUIRED
    1 Petition served on IRS.
    1 - 3 Docket List prepared and distributed
    Docket List uploaded to DIMS.
    1 - 10 ODs/functions monitor Docket Lists to identify, locate, close, and transmit docketed files to Appeals.
    11 - docketed administrative file received in Appeals ODs/functions continue process to identify, locate, close, and transmit docketed files to Appeals.
    APS (Fresno Centralized DIMS) begins searching for docketed files not yet received 11 calendar days from receipt of the docket list.

    Note:

    Within 2 days of receipt, APS acknowledges, cards and transmits file to Counsel for answer.

    40 APS (Fresno Centralized DIMS) creates dummy file for answer if file not received timely.
    60 Answer Due Date

8.4.1.6.3  (10-01-2012)
Docket Information Management System (DIMS)

  1. In Appeals, Fresno APS is responsible for downloading the Docket List file Counsel placed on the server and posting it on Appeals' automated system, "Docket Information Management System (DIMS)" .

  2. Each day that a new docket list is received, the DIMS Tax Examiners (TEs) will take the following steps:

    • Print new docket lists (for their assigned AOCs),

    • Research TLCATS and print Case Screen 1 (CSC1) for each docket number, and

    • Research ACDS (open and closed) by Name and EIN:

    IF... THEN...
    If the case is controlled and open on ACDS Let the controlling office know (via email) that the TP has petitioned, fax the CATS print to the PTM. (Case Processor can be utilized for this assignment). When the docket number has been entered and ACDS has been updated to DCJUR, close DIMS.
    If the case is closed on ACDS Coordinate with the PTM in the controlling office to request they reopen the ACDS record and forward copies of the closed office file to Counsel (noting that the original admin file will be requested.) Request the refile DLN from files, forward to Counsel when received and close DIMS. (Note – DIMS TEs will require additional assistance from the controlling PTM for CDP cases).
    If the case is not controlled on ACDS Control a skeletal record (under Fresno’s AOC) using the information on the CATS print, action code DKLSTXXX (XXX = the AOC from the docket list) and TODATE = date petition served. The following fields are mandatory: TPNAME, WUNO, MFT, TYPE, TIN, SOURCE, DO, RECV Date, Key Period, Docket Number, Address, SND TYPE, SND Date, and Tax Periods.

    Note:

    Any case with an expired "SNEXP Date" or a date that will expire in the next 10 days will require immediate research.

  3. Each month the DIMS TE (or PTM) will print a DKLSTXXX follow up report by AOC.

  4. For any case showing on the list with a follow up date of 11 days or more:

    • Research AMDISA – note the status and status date on DIMS and:

      IF... THEN...
      The AIMS status is 81/80/82 Contact the PTM for that AOC and verify receipt of the admin file and give notice that you will be transferring the skeletal record on ACDS to their AOC for them to update. Once receipt is verified, transfer the skeletal record to that AOC and close DIMS.
      The AIMS status indicates that the case is open in Compliance or a Campus Contact the source of the notice and request the admin file be forwarded to the correct Appeals Office. Note the name, date and phone number of the contact on DIMS.
      The status is 90 Research TXMOD and order the TC421, TC150 (for original return – unless electronically filed), and REFILE DLN (if different than the TC421). Use the special search to order the DLNs and request the documents be forwarded to your attention. Note the DLN and Date ordered on DIMS.
      The return is not controlled on AIMS (open or closed) Further research will be required using TXMODA, IMFOLT, or BMFOLT.

  5. For any case showing on the list with a follow up date of 40 days or more:

    • Create a dummy file following established procedures.

    • Review the caption on CATS and compare it with the filing status on IDRS.

    • Create MFT 31 Case Summary Cards for possible NPS cases controlling the statute date on ACDS.

    • Contact the Field Counsel Attorney (via email) and request notification if a NPS assessment is required.

  6. In Appeals, the responsibility for locating administrative files for all docketed cases is centralized in Fresno APS. This campus is referred to as "Centralized DIMS" .

    • Fresno APS is responsible for securing administrative files for all Appeals Field and Campus Operations.

  7. The source function sends the administrative file directly to the Appeals office designated on the Docket List. The Fresno Centralized DIMS office is responsible for making the initial and follow-up contacts to locate the administrative files if the file is not received in Appeals within ten (10) calendar days of appearing on a Docket List.

  8. Fresno Centralized DIMS contacts the source function responsible for sending the case to Appeals to obtain the file(s).

  9. If the case is not on AIMS, Fresno Centralized DIMS takes the following steps to secure the case file:

    1. Request the file using command code ESTAB or FAX the request to the appropriate Campus. Enter the full name and mailing address of the Appeals office where the file is to be sent, along with the statement "Appeals - Expedite Request" .

    2. If the case is not received within seven (7) business days, follow up by telephone with the appropriate Campus.

    3. If the case was on AIMS previously, contact Examination to ensure AIMS is re-opened and updated to Appeals.

    4. Add a DIMS Tracking contact to record the actions taken.

  10. Within two (2) business days of receipt, the APS office that receives the file will:

    1. Acknowledge receipt.

    2. "Card" the docketed case on ACDS CASES using all available information contained in the administrative file and on TLCATS, in accordance with established procedures. (See IRM 8.4.1.7.1, Docketed Case ACDS Carding Procedures).

    3. Transmit the file to Counsel for answer.

    4. Close DIMS.

8.4.1.6.3.1  (10-01-2012)
DIMS Tracking

  1. DIMS Tracking is a feature within DIMS used to record the actions taken to locate administrative files for docketed Tax Court cases.

  2. DIMS Tracking allows users to electronically track and monitor receipt of the administrative file. Users enter contact information, such as the dates and names, action notes, responses received, date the file was received, and other information, i.e. defaulted, TC 922 (AUR case), AIMS status etc.

  3. When the Docket List file is posted, the following Docket List items are automatically uploaded and displayed in DIMS Tracking as "read only" information about each case:

    • DktNo

    • List #

    • Xmittal

    • Name

    • Address

    • TIN1

    • TIN2

    • SND Date

    • SND +90

    • Issuing Off

    • Appeals Off

    • Counsel Off

    • YrsSND

    • D/L Yrs Petitioned:

  4. The following DIMS Tracking fields are updated as applicable:

    Field Name Description
    CTIN1 & CTIN2 Enter corrected TINs if research shows the information provided on the Docket List is incorrect or incomplete
    Add'l Yrs Petitioned: Enter additional years petitioned if research shows the information provided on the Docket List is incorrect or incomplete
    Petition Date Enter the date the petition is received from Counsel, if received
    TC 922* (required) This transaction code is used to identify Automated Underreporter (AUR) returns. Options are:
    • Y = TC 922 on TXMOD

    • N = no TC 922 on the account

    • UNK = unknown or not yet determined

    SN defaulted* (required) Options are:
    • Y = a default assessment was made

      Note:

      If Y, then an entry to reflect the date assessed is also required

    • N = a default assessment was not made

    • UNK = unknown or not yet determined if a default assessment was made

    Date Assessed Enter the date assessed if a default assessment was made
    AIMS status If the case is on AIMS, enter current status and date from AMDISA
    Campus If the notice of deficiency was issued by a Campus, select the Campus location from the drop-down list
    CATS Admin Enter the TLCATS Admin file location of the Appeals office that will be handling the case
    Attorney Counsel employee’s name per TLCATS
    Case on ACDS* Enter a date in this field when the docketed case is properly controlled on ACDS

    Caution:

    Entering a date in this field closes the case on DIMS


    Non-Appeals issued notices - The APS unit that receives and cards the case should enter the date the case is created on ACDS in this field
    Appeals Issued Notices - The Centralized DIMS employee will:
    • send an email to notify the issuing office the case is docketed

    • add a DIMS contact to record the action taken


    Within two days of receipt of the email, the issuing office will:
    • pull the file

    • update ACDS to Part 3

    • update CDPTS to Stage 8 (CDP cases only)

    • send the case to Counsel for answer

    • close DIMS by entering the date the case was sent to Counsel for answer/trial preparation in this field

    Contacts Click on "Add" to add a contact to document the actions taken to locate the case. The contact fields are:
    • Date - The date the action occurred

    • Name - the name of the person contacted

    • Notes - description of the action taken

    • Userid - systemically generated to identify the user who added the contact. Click on the hyperlink to view the name of the user

    * Required Field to close DIMS

8.4.1.7  (10-01-2012)
Docketed Case Received in Appeals

  1. Upon receipt of a new docketed regular OR "S" case administrative file, the APS PTM will promptly assign the case for carding.

  2. The assigned APS employee will verify the contents of the administrative file to determine if all documents, returns, etc., listed on transmittal Form 3210 are present in the file.

    Note:

    When the source function is a W&I or SBSE AUR Unit and the file is missing a Control-D generated Notice of Deficiency, refer to the AUR Control-D Contacts listed on the APS Home Page to obtain a copy of the AUR issued Notice of Deficiency. http://appeals.web.irs.gov/APS/AUR-C-D_contacts.htm

  3. The assigned APS employee will determine that the items listed on the Form 3210 have been received, sign the acknowledgment copy of the Form 3210 and return it to the originator by mail or fax. Keep a copy of the Form 3210 in the case file.

  4. The assigned APS employee will take the following steps promptly within two calendar days after receipt of the file in APS (and no later than 40 days after the petition was served, to prevent the preparation and processing of unnecessary "dummy" files):

    • Print TLCATS Case Screen 1 – Identify and highlight the Answer Due Date, Caption, and Years Petitioned

    • Card the case on ACDS using the administrative file and TLCATS documents.

    • Verify and act upon non-petitioned years (NPY) and non-petitioning spouses (NPS). APS can rely on TLCATS as to the years and parties identified in the petition. Take immediate and appropriate steps to assess, when necessary. Upon receipt of the case file from the Campus, examine TLCATS and the notice of deficiency to determine whether all of the parties named in, and all the years covered by, the notice of deficiency are included in the petition. If any of the parties or years shown in the statutory notice are not listed on TLCATS, follow procedures in IRM 8.20.6, Interim Actions - Remittances, Partials, Transfers and Returns.

      Note:

      IF... THEN...
      Any of the parties or years shown in the notice of deficiency are not listed on TLCATS
      • Contact Counsel to see if there is a non-petitioning spouse or year

      • If it is necessary to protect the statute, make the assessment before verification from Counsel is received.

    • Identify up front, based upon existing case routing guidelines, which Appeals office will consider the docketed case when it is returned by Counsel after answer and which APS office will process the case upon closing. Complete the Appeals/Counsel Routing Cover Sheet. (A copy of the Cover Sheet is posted on the Appeals web site.) This document instructs Counsel to send the administrative file to the specified Appeals office address, to the attention of the Lead Appeals Team Manager (ATM), for assignment and consideration. It also clearly identifies the Appeals office and APS address the administrative file must be returned to for closing.

      Note:

      Existing Case Routing Guidelines: Counsel field offices initially assign docketed cases to their attorneys/paralegals based upon the place of trial designated by the taxpayer. In larger cities, several Counsel field offices may work cases with the same designated place of trial. In this situation, the Counsel case assignments are further divided by taxpayer zip code. Project cases may be kept together in one field office for convenience. Compliance routes docketed administrative files to the Appeals field office indicated on the Docket List. This is generally the Appeals field office that services the Counsel field office assigned the case. Therefore, assignment of docketed cases in Appeals field offices mirrors the assignment procedures used by Counsel. Transfers for face-to-face conferences, etc., should continue using normal procedures as explained in IRM 8.1.1.1 (3), IRM 8.4.2, IRM 8.20.6, and the Appeals Case Routing page at: http://appeals.web.irs.gov/APS/caserouting.htm

      Caution:

      If the docketed administrative file has an 872-A alert on the cover do not place an Appeals/Counsel Routing Cover Sheet over it until the APS employee has verified that all periods in the Notice of Deficiency are addressed in the petition.

    • Update ACDS for EACH docketed workunit where the administrative file is sent to Counsel for answer with ACTION = "ANSWER" and a "TODATE" " equal to the date the file was sent. This will ensure the "ANSWER" follow-up report can be generated and worked.

    • Send the administrative file to the appropriate Counsel office for answer, as identified in TLCATS Case Screen 1.

    • Close the DIMS record by entering a date in the "Case on ACDS" field equal to the date the case was received by Appeals.

      Note:

      All APS employees must ensure that they card cases timely and consistently close DIMS records. This practice will reduce or eliminate Fresno Centralized DIMS creating dummy files for cases in which the original administrative files are already in Appeals.

8.4.1.7.1  (10-01-2012)
Docketed Case ACDS Carding Procedures

  1. Establish each new docketed receipt on ACDS prior to transmitting the administrative file to Counsel for filing an answer.

  2. Complete items on the case inventory and return information screen as applicable and in accordance with established procedures. Follow normal ACDS procedures found in IRM 8.20.3, Appeals Centralized Database System (ACDS), for ACDS fields and acceptable data.

  3. The same instructions used to establish cases, as outlined in IRM 8.20.3, apply when establishing docketed case on CASES, and follow the additional instructions described below:

  4. PART is computer generated and reflects whether Appeals or Counsel has jurisdiction of the case at the time. For assigned cases, the PART will display the number "2" if the case is docketed and under Appeals jurisdiction. It will display the number "3" if the case is docketed and under Counsel jurisdiction.

  5. Leave the AO = Appeals Officer (userid/POD/Group) field blank on a docketed case where an answer to a petition is required by Counsel and an assignment is not being made.

  6. REQAPPL (Request Appeal -- Date Taxpayer Requested Appeal) - Use the date the petition was filed.

  7. DKTNO (Docket Number) is the number used by Tax Court for control purposes when a petition is filed or by District or Claims Court when a complaint is filed. This item is only completed in docketed cases. Every docket number will be a separate work unit. The information for this can be obtained from various documents in the administrative file, i.e., petition, docket list, etc. The docket number for Tax Court cases is written in NNNNN-YY format, with N being the number and Y being the year docketed. (See IRM 8.4.1.2.1 for a description of all docket number identification terms or letters that further identify the type of docketed case). For District or Claims Court cases use the characters and numbers shown on the filed complaint.

  8. DC OFFICE (Counsel Office) is only completed in docketed cases. Enter the three digit code identifying the Counsel Office assigned to the case. See IRM 8.20.3-3 for a list of Counsel Office codes. The information for this item can be obtained from documents in the administrative file, i.e., docket list, petition, etc., or from TLCATS.

  9. ATTORNEY (Counsel Attorney) is only completed in docketed cases. Enter the name of the counsel attorney assigned to the case, last name first. This information can be obtained from TLCATS or Form 1734, Transmittal Memorandum.

  10. SNTYPE is completed on all docketed cases if a notice of deficiency or determination letter or other notice was issued. Also enter the SNTYPE if the case is received in 90 or 150 day status. IRM 8.20.3.3.28, SNTYPE (Source and Type of Notice of Deficiency/Determination Letter Issued), contains descriptions of valid SNTYPEs.

  11. SNDATE is the date the notice of deficiency or determination letter or other notice was issued.

  12. If the return being established is docketed before the Tax Court, enter DOCKT in the Statute Code field.

  13. Update AIMS using IDRS command code AMSTUA to:

    1. STATUS 82 if the return is docketed.

      Note:

      APS should only update a file to AIMS status 82 when the original administrative file is received or when entered decision documents are received for processing. Update to status 82 is the responsibility of the APS employee who processes receipt of the original administrative file or the entered decision documents. Premature update of a dummy file to status 82 and removal of "Dummy File" from the "NOTES" field causes the DIMS Team to stop searching for the original administrative file before it has actually been received in Appeals.

      Note:

      Each Appeals Office is assigned a 2-digit code called the AIMS Office Code (AOC). This code is used to designate a location of the primary office. When establishing a docketed case, a "2" precedes the 2-digit code. See Document 6209, Section 13.

    2. STATUS 80 if the return is nondocketed.

      Note:

      If the work unit involves a non-docketed reference return, establish the case as a related record with the same work unit number. The AIMS status is 80 for the reference return. When establishing a nondocketed case, a "1" precedes the 2-digit code. See Document 6209, Section 13.

8.4.1.7.2  (10-01-2012)
Premature Assessments and Command Code AMSTUR

  1. Although source functions are required to send docketed cases to Appeals timely, some docketed administrative files are not received in Appeals timely. Cases are sometimes prematurely defaulted or defaulted in error for a variety of reasons. If a premature assessment results, the premature assessment will need to be abated. APS has the responsibility to abate premature assessments.

  2. Secure a transcript or TXMOD, and prepare and process Form 3870, Request for Adjustment, using Priority Code 2, Hold Code 2 and annotating in Item 11, "priority abatement needed ."

    Note:

    When the case is not assigned to an ATE, process the abatement only after the review and approval of an APS Processing Team Manager or Field Counsel Attorney. Reassess the abated amount when the case is dismissed or make a new assessment to reflect an entered decision. When the case is assigned to an ATE, card the case with a note identifying the premature assessment. Ask the ATE/Appeals Team Manager to review the file prior to processing the abatement.

    Note:

    IRM 4.8.9.25.7, Status 90 Cases, outlines the steps used by Exam Technical Services to input CC STAUP and prepare and send a Field Exam prematurely defaulted docketed file to Appeals (including Command Code AMSTUR). Premature assessment cases require APS actions as outlined above.

8.4.1.7.3  (08-09-2011)
Original Return Required

  1. The original return must be requested in all docketed cases because it may be needed if the case goes to trial.

  2. When the source function did not secure or use the original return as part of its examination process, the source function should not wait until the original return is received to send all other available documents to Appeals, such as the notice of deficiency, computation, workpapers, correspondence, etc. Instead, if the original return is not readily available, the source function must transmit the docketed case to Appeals without the original return, but include an unfilled requisition, a transcript of account, and a copy of the return in the case file. APS will accept docketed administrative files without the original return(s) to immediately provide all available information to Counsel for preparing an answer to the petition.

    Note:

    APS must not reject docketed administrative files to the originator when the original return is missing.

  3. If the docketed case file does not contain the original return, APS must:

    • Verify whether a return request was made by the source function.

    • If no request for the original return was made by the source function, coordinate with the source function to determine who will make the request. Although it is the responsibility of the source function to request the original return(s), APS may agree to make the request for the original return.

    • Follow up on unfilled requests.

    • In all cases, if no original return is included, use Tax Period Modifier "N" for each tax period to indicate that the original return is missing.

    • Upon receipt of the original return, remove the Tax Period Modifier "N" . A "blank" in the Tax Period Modifier field indicates the original return is in the file.

8.4.1.8  (08-09-2011)
Docketed Case Not Received Timely in Appeals

  1. A 90-Day case is considered defaulted if it does not appear on the Docket List for a certain number of days (ranging from an additional 15 to 30 days) after the expiration of the period of time in which to file a petition to the Tax Court specified in the notice or letter. See IRM 8.2.2, Processing 90-Day Cases and Defaulted Notices.

  2. Although source functions are required to timely send docketed cases to Appeals, some docketed administrative files are not received in Appeals timely. Cases are sometimes prematurely defaulted or defaulted in error for a variety of reasons.

  3. If a case appears on the Docket List or DIMS but is not received in Appeals within forty days after the date the petition is served on the IRS, Fresno Centralized DIMS will:

    1. Create a dummy file for answer. (See IRM 8.4.1.8.1, Dummy File Procedures.)

    2. Send the dummy file to Counsel by fax or overnight mail.

    3. Card the dummy file on ACDS. (See IRM 8.4.1.8.2, Dummy File Carding Procedures.)

  4. These steps provide Field Counsel with all available information for use in preparing an answer to a petition.

8.4.1.8.1  (08-09-2011)
Dummy File Procedures

  1. The Fresno Centralized DIMS Team is currently assigned responsibility for:

    1. Creating skeletal records on ACDS for every docket number on a docket list,

    2. Researching docket lists to identify Appeals Office Codes (AOCs),

    3. Preparing dummy files for answer, and

    4. Promptly sending them to Counsel by fax or overnight mail.

    Note:

    DIMS Team case monitoring is assigned by AOC. The most current information regarding assignment of dummy file responsibilities in APS by AOC can be found on the APS page of the Appeals web site.

  2. The process of establishing skeletal records was implemented to:

    • Provide an automated method for follow-up and monitoring of dummy files,

    • Reduce processing and forwarding time on docketed administrative files when received in the local office and

    • Increase database accuracy.

  3. The DIMS Team controls skeletal records on ACDS by using the action code "DKLSTXXX" . The action code indicates that a docket list has been received and receipt of the administrative file from Compliance is pending. The "XXX" is a placeholder for input of the correct AOC for the case.

  4. When a case first appears on a docket list, the DIMS Team creates the skeletal record using information from TLCATS (print CSC 1) to input key data fields on ACDS. The cases are controlled on ACDS using Fresno's AOC to enable the DIMS Team to generate follow up reports.

  5. The skeletal record should be created within one or two days from the docket list date.

  6. When a case is received by a field or campus Appeals APS office the PTM or designee should:

    1. Use the DIMS contact list on the APS home page to identify the DIMS Tax Examiner (TE) assigned to your AOC and request that the skeletal record be transferred.

    2. The DIMS TE will transfer the skeletal record to your AOC and will close DIMS.

    3. The field or campus Appeals APS office should analyze the information in the administrative file and update ACDS and IDRS appropriately, including changing the RECDATE to the actual date received in your office.

  7. If a case remains on the "DKLSTXXX" list for 40 days or more, Fresno Centralized DIMS creates a dummy file for answer.

  8. The dummy file consists of copies of all available information obtained from a variety of sources. Most IRS Campus Exam sourced cases are controlled on the Correspondence Examination Automation System (CEAS). In Appeals, designated DIMS Team and Fresno Campus APS employees have permission to access CEAS for research only.

  9. A "dummy" administrative file contains all available information related to the case. The dummy file for answer purposes should contain, at a minimum:

    • CEAS information, if available, or if not, a clearly visible statement that no CEAS is available

    • RTVUE

    • Transcript of account

    • Appeals/Counsel Routing Cover Sheet (posted on the Appeals web site)

8.4.1.8.2  (10-01-2012)
Dummy File Carding Procedures

  1. The ACDS record is created based on all available information, such as the petition, notice of deficiency (if available), CATS, IDRS, AIMS and CFINQ information. Use all obtainable information to card the case on ACDS.

    Note:

    ACDS (NO-National) must be researched for all docketed cases to avoid creating a duplicate record. If, however, a duplicate record is found, the WUNO created first should be kept and any later WUNO deleted.

  2. The DIMS TE will transfer ACDS to the appropriate Appeals field or campus office by selecting it from the drop down list on the Main CASES menu.

  3. The appropriate field or campus APS office will be alerted by email that a dummy file was forwarded to Counsel for answer and that the ACDS record was transferred to the field or campus AOC.

  4. The field or campus APS office will also be instructed to accept the record from the "INBOX" and update the "ACTION" Code to "Answer" as that code is systemically removed with the transfer action.

  5. The DIMS Team will continue efforts to locate the administrative file.

  6. The DIMS TE must be sure to promptly and accurately verify and act upon non-petitioning spouse, non-petitioned years and potential dismissals on all dummy file cases. The DIMS TE must compare the case caption on TLCATS to the filing status on IDRS and create additional MFT 31 Case Summary Cards and NPS assessment requests, as necessary. However, the DIMS TE will not abate premature assessments on dummy file cases. The APS office with ACDS control of the case will abate premature assessments when directed to do so by Counsel.

  7. On ACDS, the DIMS TE will write "DUMMY FILE" in "Notes" to indicate that this is a "dummy" file and that the actual administrative file has not been received.

    Note:

    Remove the "DUMMY FILE" entry from "Notes" when the actual administrative file is received.

  8. In addition, on ACDS, enter the following information:

    • RECDATE = date dummy file created

    • REQAPPL = date petition filed

    • ACTION = ANSWER

    • TODATE = equal to the date the case was created – also equal to the date the dummy file is forwarded to Counsel

    • FROMDATE = Blank

    • LACTION = DKTLST XXX (Dkt List #)

    • LTODATE = equal to the date the case was created – also equal to the date the dummy file is forwarded to Counsel

      Note:

      Use of LACTION DKLST XXX with a valid TODATE and blank FROMDATE indicates that the actual administrative file has not been received.

  9. Do not close DIMS until the original admin file is received. (See IRM 8.4.1.8.3, Administrative File Received After Dummy File Created/Carded).

8.4.1.8.3  (10-01-2012)
Administrative File Received After Dummy File Created/Carded

  1. When the original administrative file is received after a dummy file for answer was created and carded on ACDS, APS must perform research to determine the location of the dummy file so that the administrative file can be associated.

    • Research ACDS to determine if Appeals has possession of the dummy file. If the dummy file is currently assigned to an ATE, prepare a Form 3210 and send the original admin file to the ATE to associate it with the dummy file. (Notes field = "admin file received, associate with dummy file" )

    • Research TLCATS to determine if Counsel has possession of the dummy file. If the dummy file is currently in Counsel, prepare a Form 3210 and send the original admin file to Counsel to associate it with the dummy file. If the dummy file location is unclear on TLCATS, call Counsel to verify the dummy file location. (Notes field = admin file to Counsel to associate with dummy file)

  2. If the original administrative file is received before ASGNDATE is input, change the RECDATE to the date the administrative file is received in Appeals.

  3. If the original administrative file is received after ASGNDATE is input, change the RECDATE to the same date as ASGNDATE.

    Note:

    This practice creates a more accurate P1 measure.

  4. Update ACDS as follows:

    • In "NOTES" , record the actual received date as follows: "ADMIN FILE RECD MM/DD/YYYY ASSOCIATED W/DUMMY FILE" .

    • Input a FROMDATE in LACTION = to the date the original administrative file is received.

    These entries will indicate that the case was originally assigned as a dummy file but the actual administrative file was later received and associated with the dummy file.

  5. Input REQAPPL using date petition filed in Tax Court, as shown in the original administrative file.

  6. Close the DIMS Record by entering a date in the "Case on ACDS" field equal to the date the original administrative file was received.

8.4.1.8.4  (08-09-2011)
Dummy File for Consideration

  1. If no administrative file is received and Counsel answers the petition using the dummy file documents, then Counsel will include a copy of the petition, answer, Designation of Place of Trial, and any other pertinent information from the legal file, in the dummy file. Counsel will then send the dummy file for consideration DIRECTLY to the Appeals office and ATM identified in the orange Cover Sheet previously placed on top of the dummy file for answer by APS.

  2. See IRM 8.4.1.13, Docketed Case For Assignment and Consideration After Answer.

8.4.1.9  (08-09-2011)
Non-Petitioning Spouse Cases

  1. When a notice of deficiency is issued to both a husband and wife who filed a joint return, and one spouse petitions the U.S. Tax Court while the other spouse either agrees to the proposed deficiency in Appeals or does not appeal , the case is considered a non-petitioning spouse case .

  2. APS verifies the address of both taxpayers on all non-petitioning spouse cases. Use IDRS command code SPARQ to determine if the last known address of both taxpayers is the same as the address on the notice of deficiency.

  3. When it is clear the notice of deficiency was sent to the last known address, ensure a default assessment is made on the non-petitioning spouse. If a default assessment has not been made, APS makes the default assessment.

  4. If separate residences were established and it is not clear from the administrative file that both taxpayers received the notice of deficiency, APS will:

    1. Immediately input the case on CASES following the procedures set forth below to control the statute date on ACDS for the taxpayer who may not have received the notice of deficiency.

    2. In notes, indicate "spouse at different address" .

    3. Immediately deliver the case to the Processing Team Manager (PTM) to determine the appropriate action.

    4. The PTM may need to immediately transmit the case to Counsel to determine the appropriate action to take on the case.

      Note:

      A notice of deficiency sent to an address other than the last known address is NOT valid. Therefore, an assessment may not be made as a default assessment. (In some cases, a protective assessment may be requested by Counsel, until it can be determined if the notice of deficiency was mailed to a proper address.) The statute for the taxpayer sent an invalid notice of deficiency is the normal or extended statute (before the notice of deficiency was issued.)

    5. If the statute is still open, a new notice of deficiency must be issued. Refer the case to the lead Appeals Team Manager (ATM). The lead ATM determines whether to return the case to Compliance or issue a notice of deficiency.

    6. If the statute is not open, follow established procedures for preparing Form 3999, Barred Statute Report.

8.4.1.9.1  (10-01-2012)
Card the Non-Petitioning Spouse Workunit

  1. A non-petitioning spouse case requires special CASES procedures to create a work unit that includes a key case (the joint return) and two related cases, one for each spouse.

    • Joint return (key case)

    • Petitioning spouse (related case record, same workunit number as the key case)

    • Non-petitioning spouse (related case record, same workunit number as the key case)

    Note:

    The order of carding is no longer systemically relevant, although in practice, most prefer to card the key case first.

8.4.1.9.1.1  (10-01-2012)
Card the Joint Return

  1. Establish a separate case for the joint return following normal ACDS procedures, see IRM 8.20.3, Appeals Centralized Database System (ACDS), for ACDS fields and acceptable data and follow the additional instructions described below:

    1. FEATRCD — Enter NS to identify a non-petitioning spouse case.

    2. TP Type - Only valid with MFT 30. Enter:

      P - if the petitioner is the primary TIN

      S - if the petitioner is the secondary TIN

    3. REQAPPLS — Enter the date the petition was filed by the petitioning spouse.

    4. DKTNO — Enter the docket number as it appears on the petition or Docket List.

    5. KEYTP — Leave blank.

    6. KEYTIN — Leave blank.

  2. On the case return information screen, follow normal ACDS procedures except for the following:

    1. Statute Date — Leave blank.

    2. Statute Code — Enter NPS.

    3. PropdTax and PropdPen — Enter the tax deficiency and penalty(s) amounts shown on the notice of deficiency.

    4. Duplication — Leave blank.

8.4.1.9.1.2  (10-01-2012)
Card the Petitioning Spouse's Case

  1. Establish a separate record for the petitioning spouse using the same work unit number as the joint return. Follow normal ACDS procedures, see IRM 8.20.3, Appeals Centralized Database System (ACDS), for ACDS fields and acceptable data and follow the additional instructions described below:

    1. TPName — Enter the name of the petitioning spouse.

    2. Address — Enter the address of the petitioning spouse.

    3. TIN — Enter the petitioning spouse TIN.

    4. MFT — Enter MFT 31.

    5. TYPE — Enter I.

    6. FEATRCD — Enter NS to identify a non-petitioning spouse case.

    7. REQAPPL — Enter the date the petition was filed.

    8. DKTNO — enter docket number as it appears on the petition.

    9. KEYTP — Enter the name of the joint return.

    10. KEYTIN — Enter the name of the primary TIN on the joint return.

    11. SNTYPE — enter type of SN issued.

    12. SNDATE — enter date notice of deficiency was issued.

    13. NOTES — You may wish to enter "Petitioning Spouse " .

  2. On the case return information screen, follow the normal procedures except for the following:

    1. AIMS Indicator — Enter E since the individual taxpayer is not on AIMS.

    2. Statute Date — Leave blank.

    3. Statute Code — Enter DOCKT.

    4. PropdTax and PropdPen— Leave these fields blank.

    5. Duplication — Leave this field blank.

8.4.1.9.1.3  (10-01-2012)
Card the Non-Petitioning Spouse's Case

  1. Establish a separate case for the non–petitioning spouse using the same work unit number as the joint return. Follow normal ACDS procedures found in IRM 8.20.3, Appeals Centralized Database System (ACDS), for ACDS fields and acceptable data and follow the additional instructions described below:

    1. TPName — Enter the name of the non-petitioning spouse.

    2. Address — Enter the address of the non-petitioning spouse.

    3. TIN — Enter the TIN of the non-petitioning spouse.

    4. MFT — Enter MFT 31.

    5. TYPE — Enter REF.

    6. FEATRCD — Enter NS to identify a non-petitioning spouse case.

    7. REQAPPLS — Leave blank.

    8. DKTNO — Leave blank.

    9. KEYTP — Enter the name of the joint return.

    10. KEYTIN — Enter the primary TIN of the joint return.

    11. SNTYPE — Enter the stat notice type.

    12. SNDATE — Enter the stat notice date.

    13. NOTES — You may wish to enter "Non-Petitioning Spouse " .

  2. On the case return information screen, follow the normal ACDS procedures except for the following:

    1. AIMS Indicator — Enter E since the individual return is not controlled on AIMS.

    2. Statute Date — Enter the normal or extended statute date.

    3. Statute Code — Leave blank.

    4. PropdTax and PropdPen — Leave these fields blank.

    5. Duplication — Leave blank.

8.4.1.10  (10-26-2007)
Nonpetitioned Year(s)

  1. See IRM 8.2.2.12, APS Actions on Non-Petitioned Year(s) in Multiple Year Statutory Notice, for procedures relating to assessment of a year included on the notice of deficiency but not on the petition.

8.4.1.11  (10-26-2007)
Joint Return — Separate Petitions

  1. If the notice of deficiency is issued to both a husband and wife who filed a joint return and each files a separate petition with the U.S. Tax Court, each docket number is a separate work unit number. Follow the procedures in the following subsections to establish the returns on ACDS.

8.4.1.11.1  (10-26-2007)
Card the Primary TIN of a Joint Return when Taxpayers File Separate Petitions

  1. When one notice of deficiency is issued to both a husband and wife and each files a separate petition, each docket number is a separate work unit number.

  2. Establish a workunit for the primary TIN of a joint return on the case inventory screen. This is the key case record. Follow normal ACDS procedures, see IRM 8.20.3, Appeals Centralized Database System (ACDS), for ACDS fields and acceptable data and follow the additional instructions described below:

    1. TPName — Enter the name of the taxpayer with the primary TIN on the joint return.

    2. Address — Enter the address of the taxpayer with the primary TIN on the joint return.

    3. TIN — Enter the primary TIN of the joint return.

    4. MFT — Enter MFT 31.

    5. DKTNO — Enter the docket number as it appears on the petition or docket list.

    6. KEYTP — Enter the name of the joint return.

    7. KEYTIN — Enter the primary TIN of the joint return.

    8. NOTES — Enter "Taxpayers Filed Separate Petitions - Related DKTNO (enter the docket number of the other spouse)" .

  3. On the case return information screen, follow the normal ACDS procedures except for the following:

    1. AIMS Indicator — Enter E since the individual taxpayer is not controlled on AIMS.

    2. Statute Date — Leave blank.

    3. Statute Code — Enter DOCKT.

    4. PropdTax and PropdPen — Leave blank.

    5. Duplication — Leave blank.

8.4.1.11.2  (10-26-2007)
Card the Joint Return when Taxpayers File Separate Petitions

  1. Establish a separate record for the joint return using the same work unit number as the primary TIN key case. This is a related case record. On the case inventory screen follow normal ACDS procedures, see IRM 8.20.3, Appeals Centralized Database System (ACDS), for ACDS fields and acceptable data and follow the additional instructions described below:

    1. REQAPPLS — Enter the date the petition was filed for the primary taxpayer of the joint return.

    2. DKTNO — Enter the docket number as it appears on the petition or docket list.

    3. KEYTP — Leave blank.

    4. KEYTIN — Enter the secondary taxpayer's TIN for cross referencing.

    5. NOTES — Enter "Taxpayers Filed Separate Petitions - Related DKTNO (enter the docket number of the other spouse)" .

  2. On the case return information screen, follow normal ACDS procedures except for the following:

    1. Statute Date — Leave blank.

    2. Statute Code — Enter N/A.

    3. Proposed Def/O/A (Tax and/or (Pen)) — Enter the tax deficiency and penalty(s) for each year as they appear on the statutory notice.

    4. Duplication — Leave blank.

8.4.1.11.3  (10-26-2007)
Card the Secondary TIN when Taxpayers File Separate Petitions

  1. Establish a separate record with a new workunit number for the secondary TIN of a joint return. On the case inventory screen follow normal ACDS procedures, see IRM 8.20.3, Appeals Centralized Database System (ACDS), for ACDS fields and acceptable data and follow the additional instructions described below:

    1. TPName — Enter the name of the taxpayer with the secondary TIN on the joint return.

    2. Address — Enter the address of the taxpayer with the secondary TIN on the joint return.

    3. TIN — Enter the secondary TIN of the joint return.

    4. MFT — Enter MFT 31.

    5. REQAPPLS — Enter the date of the petition of the secondary taxpayer.

    6. DKTNO — Enter the docket number as it appears on the petition or docket list.

    7. KEYTIN — Enter the primary TIN of the joint return for cross referencing.

    8. NOTES — Enter "Taxpayers Filed Separate Petitions - Related DKTNO (enter the docket number of the other spouse)" .

  2. On the case return information screen, follow normal ACDS procedures except for the following:

    1. AIMS Indicator — Enter E since the individual taxpayer is not controlled on AIMS.

    2. Statute Date — Leave blank.

    3. Statute Code — Enter DOCKT.

    4. PropdTax and PropdPen — Leave blank.

    5. Duplication — Leave blank.

8.4.1.12  (10-01-2012)
Substitute for Return (SFR) Program Cases Received in Docketed Status

  1. Usually these cases are received from Campus Compliance in docketed status. Although it is possible for the taxpayers to request a non-docketed Appeals hearing, time constraints limit the number of cases received in non-docketed status.

  2. When received, APS establishes them on AIMS (CC/AM424A) if not done by Campus Compliance prior to sending the case.

  3. These cases are IMF accounts only.

  4. Establish on CASES following normal procedures except for:

    • FEATRCD - Enter "NF"

    • STATUTE CODE - Enter "DOCKT" or "SUB" as appropriate

    Note:

    If Compliance secures a delinquent return subsequent to processing a SFR on a non-docketed case and the return is signed by the taxpayer, enter the statute date - (three years from the received or signature date, whichever is later).

  5. Typically, the SFR will only involve one spouse even though both husband and wife may have petitioned the Tax Court. Until a joint filing status is approved by the ATE, only the name/TIN reflected on the SFR are established on AIMS/ACDS. When appropriate, the case is converted from Separate to Joint at closing.

8.4.1.13  (10-01-2012)
Docketed Case For Assignment and Consideration After Answer

  1. After answer, Counsel sends the administrative file (or dummy file) for consideration DIRECTLY to the Appeals office and ATM identified in the Orange Cover Sheet previously placed on top of the administrative file by APS. Counsel puts copies of the petition, Designation of Place of Trial, and answer in the administrative file for the ATE to use.

  2. Upon receipt of the file from Counsel after answer, the ATM and/or ATM secretary assigns the case to an ATE on ACDS.

    Note:

    Upon assignment, the "FROMDATE" field on the case inventory screen is systemically completed with the assignment date. If APS receives an administrative file before the system completes the "FROMDATE" field, DO NOT manually enter a "FROMDATE" . Manually inputting a "FROMDATE" before the case is assigned removes the case from the "ANSWER" follow up report and leaves APS with no way to monitor the statute.

  3. While on ACDS, the ATM and/or ATM secretary issues the Uniform Acknowledgement Letter (UAL) and then gives/sends the administrative file to the ATE. Use care to ensure the Uniform Acknowledgement Letter is properly sent to any identified representative and that ACDS reflects the representative’s information. See IRM 8.4.1.15.1, Attorney of Record in Docketed Cases, and IRM 1.4.28.3, Assignment and Control of Work.

  4. When the ATM and/or ATE receives the administrative file, they must identify any processing instructions or issues raised by Counsel for actions needed on non-petitioning spouse, non-petitioned years or abatement of premature assessments and alert APS immediately.

    Note:

    Read Form 1734 (Counsel Transmittal) to ensure there is no action needed on the case.

8.4.1.14  (10-01-2012)
Preliminary Review of Assigned Docketed Case

  1. ATEs will promptly review all docketed cases when received to verify the completeness of the case and the timeliness of the petition.

  2. All returns, Compliance documents, and Counsel documents (including a copy of the petition, answer, and designation of place of trial) should be in the file and properly arranged.

  3. When the ATE receives a dummy file for consideration, it should contain all available return and Compliance information, and also the petition, answer, and designation of place of trial from Counsel.

    Note:

    If essential documents are missing from the dummy file, it may be necessary to request copies of documents from the taxpayer. The ATE should consult with the Appeals Team Manager (ATM) to determine the appropriate action to take.

  4. The ATE must also review the ACDS Case Summary Card for accuracy, and submit any necessary updates/corrections using the validation tracking system (VTS), or, if the data field that needs correction is not available for update via the VTS, then submit a request to APS immediately. The campus and field offices will use the following procedures to request assistance from APS in correcting or updating ACDS:

    1. Prepare “ACDS Update Request Form” found on APGolf under ACDS Updates, completing the required items.

      Note:

      APS will return requests that can be completed by the ATEs. If an ACDS Update Request must be used, then ATEs should use the most recent ACDS Update Form from APGolf.

    2. Find the correct email address on OUTLOOK and email the update request form via encrypted email (do not send to the PTM’s mailbox) to: *AP-TS-APS-(your Area, East or West)-(your APS local office).

    3. APS will process the “ACDS Update Request Form” within 24 hours of receipt. APS will email the requesting employee if clarification is needed to process the request.

    4. APS will return any requests for update/corrections that are not submitted via the electronic form/mailbox. The electronic mailboxes allow APS management to monitor timeliness and accuracy of the updates.

8.4.1.14.1  (10-01-2012)
Preliminary Review for Timely Filing

  1. When the petition appears to be untimely, the ATE should immediately contact the Field Counsel attorney assigned the case to discuss the possibility of Counsel filing a motion to dismiss. The original administrative file should be obtained and reviewed prior to filing a motion to dismiss.

  2. A dismissal for lack of jurisdiction may be based on circumstances which 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.

    1. Last known address is defined in Treas. Reg. § 301.6212-2(a) as the address that appears on the taxpayer's most recently filed and properly processed tax return, unless the Service is given clear and concise notification of a different address.

    2. Notice to a third party of a new address is generally not notice to the Service. However, Treas. Reg. § 301.6212–2(b)(2) provides an exception to this general rule by authorizing the Service to update taxpayer addresses by referring to data accumulated and maintained in the United States Postal Service National Change of Address database (NCOA database).

    3. The new address obtained from the NCOA database is the taxpayer's last known address, unless the Service is given clear and concise notification of a different address.

8.4.1.15  (10-01-2012)
Preparing For and Holding the Conference

  1. Follow procedures found in IRM 8.6.1, Conference and Issue Resolution,IRM 8.6.2, Appeals Case Memo Procedures, and IRM 8.6.3, Appeals Rulings, for information to help in preparing for and holding the conference with the taxpayer.

8.4.1.15.1  (08-09-2011)
Attorney of Record in Docketed Cases

  1. In docketed Tax Court cases, suits for refund, and bankruptcy cases that are judicial tax proceedings, no power of attorney is required from a Counsel of Record. An attorney becomes the Counsel of Record by filing a petition or refund suit or entering an appearance in the case. A Counsel of Record is authorized to act on behalf of the petitioner in the court proceedings, access the tax information of the person he/she represents and represent the taxpayer before the Internal Revenue Service. In a case docketed in the Tax Court, anyone other than the attorney of record must be eligible to practice before the IRS and, in order to be recognized, must present a Form 2848 or other power of attorney plus a declaration.

  2. See the following table for additional information on an attorney of record:

    Scope of Practice Before IRS Source of Eligibility to Practice Required Evidence of Authority Required for Disclosure of Tax Information (No Authority to Represent) Appearance as Taxpayer's Witness
    Any IRS office Publication 216, 601.509 Power of attorney not required Form 8821 or equivalent Provides information - does not represent TP

8.4.1.15.2  (10-01-2012)
Request for Legal Advice

  1. Appeals cannot request a Technical Advice Memorandum (TAM) or a Technical Expedited Advice Memorandum (TEAM) on any issue if the same issue is involved in a docketed case for any taxpayer for any taxable year. Instead, Appeals requests legal advice from Field Counsel.

  2. TAMs and TEAMs are advice published by the Office of Associate Chief Counsel concerning the interpretation and proper application of the tax law, tax treaties, regulations, revenue rulings, notices or other precedents to a set of specific facts involving a specific taxpayer.

  3. When requesting legal advice in a docketed case, send one information copy of the request for legal advice to the Associate Area Counsel office assigned to the docketed case.

  4. The Form 4368 must clearly indicate that the request involves a docketed case. In docketed cases, do not advise the taxpayer (petitioner) that legal advice was requested.

  5. See IRM 8.6.3, Appeals Rulings, for detailed information on requesting advice.

8.4.1.15.3  (11-01-2013)
New Issues in Docketed Cases

  1. A new issue in a docketed case is any adjustment to or change to an item that affects the petitioner's tax liability that was not included in the notice of deficiency and is raised or discussed during consideration of the case.

  2. Appeals will not raise a new issue in a docketed case. However, Appeals will consider new issue(s) the Government raises in its pleadings and may consider any new evidence developed by Compliance or Counsel to support the Government's position.

    Note:

    The Government has the burden of proof on new issues the Government raises in its pleadings.

  3. Whenever a petitioner raises an issue not previously examined or raised in the petition, the assigned Appeals hearing officer must prepare a brief memorandum to the assigned Area Counsel attorney. Submit the completed memorandum to the ATM to be forwarded to Counsel. The memorandum must:

    1. Describe the new issue

    2. Assess whether Appeals believes the issue is amenable to settlement

    3. State whether additional factual development is necessary, and

    4. Add any other observations and recommendations Appeals may have concerning the new issue

  4. Advise the petitioner that no settlement discussion will take place with respect to the new issue until the assigned Area Counsel attorney determines whether a formal amendment of the pleadings is needed to raise the new issue pursuant to Tax Court Rule 41(a).

    Note:

    Chief Counsel favors formal amendments to the pleadings unless a substantial reason exists for permitting Appeals to consider a new issue raised by the petitioner without a formal amendment to the pleadings. When the new issue involves a Coordinated Industry Case (CIC), a Compliance Coordinated Issue (CCI), an Appeals Coordinated Issue (ACI), large dollar amounts, or is otherwise significant, Area Counsel generally will ask the petitioner to formally amend the pleadings before Appeals considers the new issue.

  5. Within ten (10) business days of receipt of the memorandum from Appeals, the assigned Area Counsel attorney will notify Appeals in writing as to whether Appeals may consider the new issue raised by the petitioner in the absence of a formal amendment to the pleadings.

    Note:

    When Area Counsel determines that Appeals may consider a new issue without a formal amendment to the pleadings or the petitioner raises a new issue in a formal amendment to the proceedings, the Appeals hearing officer will retain jurisdiction and refer the issue to Compliance for review and to make a determination.

  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 for the first time, discontinue Appeals consideration of the case and immediately contact the assigned Area Counsel attorney.

8.4.1.15.4  (10-26-2007)
Assistance to Counsel/Appeals

  1. There are a number of circumstances where Counsel and Appeals may request and provide assistance to each other in the working of docketed cases.

  2. Appeals may request the assistance of Counsel in docketed cases in the same manner as prescribed in IRM 8.2.1, Agreed Pre-90-Day Income Tax Cases.

  3. Counsel may request Appeals assistance during trial preparation of cases in which Appeals has developed knowledge and expertise that is beneficial to Counsel. If resources and workloads permit, Appeals assists Counsel as an advisor and, if appropriate, shares in some part of trial preparation.

8.4.1.16  (10-01-2012)
"Last Chance" Letter Assistance from Counsel

  1. The "Last Chance" Letter is designed to encourage unresponsive petitioners to initiate settlement with Appeals as early as possible.

  2. When requested, SB/SE Field Counsel (Counsel) will issue a "Last Chance" Letter strongly encouraging petitioners to participate in the resolution of their docketed cases or prepare to go to trial.

  3. When to use:

    • Ask Counsel to send the "Last Chance" Letter to petitioners who have not meaningfully responded to contacts to initiate settlement negotiations.

    • Include "no response" situations.

    • Ask Counsel to send the letter any time it may help get petitioner cooperation.

  4. Appeals coordinates any "Last Chance" Letter issuance needed on cases referred to Exam for premature referral assistance.

    • The Examiner notifies the ATE when a petitioner does not respond.

    • The ATE determines whether a "Last Chance" Letter is needed, and if needed, sends a request to Counsel.

    • The Examiner follows up with the ATE if the petitioner does not respond ten calendar days from the letter's date.

    • The ATE will then take the actions outlined in (6) below.

      Note:

      In some locations local agreements allow the Examiner to contact Counsel directly to request issuance of the letter without involving the ATE.

  5. The steps to request that Counsel issue a "Last Chance" Letter are:

    1. Ask Counsel to prepare and issue the letter by sending an encrypted email to the assigned field Counsel attorney/paralegal and also copy their Associate Area Counsel (AAC).

      Note:

      http://counsel.web.irs.gov/etools/counsel_irs/pdirectory.asp#directorysearch The Chief Counsel Telephone Directory is helpful in identifying the appropriate Associate Area Counsel to copy with the "Last Chance" Letter request

      .

    2. Include the name of the petitioner(s) and the docket number in your request.

    3. Counsel prepares and issues the "Last Chance" Letter to the petitioner(s) within 2 business days of receiving the ATE's request. The letter specifies the petitioner(s) has ten calendar days from the letter's date to respond to Appeals.

      Note:

      There is no standard "Last Chance" Letter format and each Counsel Field attorney will prepare the letter in accordance with local procedures.

    4. Once issued, Counsel attaches a copy of the dated letter to an encrypted email and sends it to the requesting ATE.

    5. Note the email request and Counsel response in the ACDS CARATS history sheet and hold the case for the period indicated.

  6. If ... Then ...
    The petitioner(s) responds to the Last Chance Letter The ATE initiates settlement negotiations
    The petitioner(s) does not respond to the Last Chance Letter The ATE attempts at least one more contact by telephone using updated information
    • if petitioner(s) responds, initiate settlement

    • if petitioner(s) doesn't respond, process case in accordance with existing trial preparation procedures

    Note:

    Continue all required notifications and requests to petitioners to participate in the Appeals process as currently defined in the "S" case or existing local contact procedures.

    Note:

    This process will not reduce the time-frame commitment for providing cases to Counsel with at least three weeks remaining before the start of any calendar.

8.4.1.17  (08-09-2011)
Settlement of Docketed Cases

  1. The settlement approach and elements of evaluating issues are not affected by whether a case is non-docketed or docketed. An unacceptable settlement in non-docketed status does not become acceptable solely because it is reconsidered in docketed status; nor does an unacceptable settlement become more acceptable when a case is calendared for trial than prior to being calendared for trial.

  2. This, of course, does not preclude recognition of changes in judicial interpretation of the law and changes in Service position. It is also recognized that in reconsideration of a case or in trial preparation, additional facts may arise which can affect evaluation of the case. See IRM 8.6.4, Reaching Settlement and Securing an Appeals Agreement Form, for additional guidance on settling cases.

8.4.1.17.1  (10-26-2007)
Settlement of Related Cases

  1. No settlement offer will be accepted by Appeals where there is a related case in Counsel unless both offices agree that the offer is acceptable.

  2. Disagreements between Appeals and Counsel on whether a settlement offer should be accepted is resolved by Area Counsel, with the advice and assistance of the Appeals Area Director and the Associate Chief Counsel responsible for the issue.

  3. Counsel should review proposed Appeals Notices of Deficiency, claim disallowances, and final adverse letters for any case related to a docketed case.

8.4.1.17.2  (10-01-2012)
Stipulation/Decision Preparation

  1. In most docketed cases settled by Appeals, an Appeals employee prepares the necessary settlement documents and has these documents executed by the taxpayer or counsel of record.

  2. Appeals prepares simple settlement documents using the format approved by Counsel. Typically, the following simple stipulation decision documents are prepared by Appeals:

    • Deficiency in Income Tax (Simple Stipulation Decision)

    • Deficiency in Income Tax with Penalties and /or additions to tax

    • No Deficiency and No Overpayment

    • Multiple petitioners

    • Simple Innocent Spouse cases

    Note:

    In all cases where Appeals prepares a decision document for the taxpayer’s signature, Appeals must review source documents, such as the petition and any orders in the file, regarding the caption. In addition, Appeals must access www.ustaxcourt.gov to ensure the proper caption is used. If there is a discrepancy between the caption shown on source documents and the caption shown on the official Tax Court web site, Appeals contacts Counsel to determine the correct caption to use. Also, as a general rule, the Counsel signature block is left blank unless local arrangements were made.

  3. In complicated settlements, Appeals may ask Counsel to prepare the settlement documents. Complicated situations generally include, but are not limited to, the following:

    • Prepayment Credits,

    • Restricted Interest,

    • Tentative Carryback Allowance,

    • Jeopardy Assessments,

    • Prior Unpaid Assessments,

    • Excessive Claimed Withholding Tax,

    • Estimated Tax Payments,

    • Overpayment cases,

    • Transferee or Fiduciary Liability,

    • Complex Innocent Spouse cases, and

    • Section 531 cases.

  4. For cases where Field Counsel is responsible for preparing the decision documents, Field Counsel will:

    1. Prepare the settlement documents, and

    2. Return the settlement documents to Field Appeals to secure signature from the taxpayer. See IRM 8.4.2 for guidance on Field Counsel preparation and mailing of Campus Appeals decision documents.

    Note:

    APS uses the ACDS action code PREPSTIP to reflect these cases.

  5. In general, on regular or "S" cases, ATEs prepare the settlement documents and seek the taxpayer's signature before the conclusion of the conference, if possible, or mail them directly to the taxpayer or representative.

  6. Where unusual or complex circumstances exist, proposed settlements of regular docketed cases are reviewed by the Appeals Team Manager (ATM) before the settlement documents are forwarded to the taxpayer for signing.

  7. Counsel reviews the format and accuracy of all settlement documents prepared by Appeals before filing with the Court.

8.4.1.18  (01-06-2012)
Preparing Settlement Computations on Docketed Cases

  1. Appeals is responsible for preparing the necessary computations for docketed cases settled either by Appeals or by Counsel. These computations are often prepared by a Tax Computation Specialist (TCS).

  2. When the docketed case is settled as an agreed case, follow the normal procedures for preparing settlement computations found 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. (See the TCS Sharepoint site for a list of types of cases which may require notations or special formats in the settlement computation. The Sharepoint site is accessed through a link on the Appeals TCS web site.)

    1. If the requestor wants the name shown on a Form 3610 (or Form 5278, Form 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) when requesting a settlement computation from TCS. 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. The heading on Form 3610 (if prepared) may be changed from "Audit Statement" to "Counsel Settlement Audit Statement."

  4. If a joint statutory notice of deficiency was issued but the spouses filed separate petitions:

    1. When preparing settlement computations for these types of cases, it is recommended that the following statement be added:

      "The deficiencies in income taxes and penalties are duplications of the deficiencies and penalties set forth in the case of (enter name shown in petition), 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 the petitioners jointly, will discharge the instant petitioner from liability."

      Note:

      This statement in the settlement computation may be used for any case requiring computations using joint filing status when the taxpayers have filed separate petitions.

8.4.1.18.1  (10-01-2012)
Tentative Allowances in Docketed Cases

  1. Taxpayers may report a net operating loss or credit carryback loss as a tentative allowance on Form 1045 (individuals) or Form 1139 (corporations). This is called a tentative allowance or tentative carryback.

    1. A tentative allowance is identified on an account module with TC 295. When this transaction code is present, either a Form 1045 (individuals) or a Form 1139 (corporations) was filed.

  2. Compliance usually secures Form 1045/Form 1139 and places it in the case file along with the return. If the form is not in the case file, the ATE should take steps to secure a copy so an analysis can be made to determine what year the carryback originated and the amount of the carryback allowed.

  3. The TCS should prepare Form 2285, Restricted Interest Worksheet, when tentative allowances are involved. See IRM 8.17.6, Interest Issues in Settlement Computations, for additional information.

  4. Further discussion of tentative allowances (Form 1045/Form 1139) is found at IRM 8.17.4.12, Tentative Allowances and Other Carryback Claims In the Notice of Deficiency Statement.

  5. Handling a tentative allowance in settlement computations for a docketed case depends on how it was treated in the notice of deficiency. The procedures for handling tentative allowances in docketed cases may differ depending on whether the carryback was ignored during the preparation of the statutory notice of deficiency.

    1. Although a tentative allowance on a Form 1045 or a Form 1139 may have been ignored when preparing a notice of deficiency, it may be "provisionally allowed" in a docketed case settlement computation.

    2. Definition of "provisionally allowed" : Normally, if there are tentative carrybacks involved, the case will not be closed until a determination of the correct amount of loss or credit is made in the source year. However, if Appeals or Counsel decide not to wait for a loss/unused credit year to be examined, the case may be closed by "provisionally" allowing the claimed carryback modified (if required) by agreed adjustments in the taxable years included in the settlement computation.

    3. The ATE or Counsel will determine if the carryback claimed on Form 1045 or Form 1139 will be allowed in the settlement computation. They should notify the TCS if this allowance is a final determination or a "provisional allowance" of the carryback.

  6. Carryback is "provisionally allowed" by Appeals or Counsel:

    1. If the starting point for the settlement computation is either the return, or the statutory notice of deficiency where the tentative allowance was ignored in the notice, the carryback is allowed for each year up to the amount shown on Form 1045 or Form 1139. Allowance of an additional amount in a tax year should be avoided if there is doubt whether it would create a duplicate allowance for the taxpayer. The "Tax per return or as previously adjusted" amount in the settlement computation must include the TC 295 from the tentative allowance. Form 3610 (or Form 5278, Form 4549, etc.) is modified to include the statement shown in IRM 8.17.5.3.1: "The net operating loss deduction or other loss or credit carryback reflected herein which gave rise to the tentative allowance of $________ is provisionally allowed and is subject to change upon examination of the returns of the loss year or unused credit year."

    2. If the starting point for the settlement computation is the statutory notice of deficiency where the tentative allowance was included in the notice, normally no changes would need to be made to the amount allowed in the notice (If the amount included in the notice is correct). Usually the only action needed if the carryback is "provisionally allowed" by Appeals or Counsel would be to modify Form 3610 (or Form 5278, Form 4549, etc.) to include the statement shown in IRM 8.17.5.3.1. (Make sure that the "tax per return or as previously adjusted" amount in the settlement computation includes the TC 295 from the tentative allowance).

  7. Carryback is allowed by Appeals or Counsel - Final determination subsequent to the notice of deficiency:

    1. If the starting point for the settlement computation is either the return, or the statutory notice of deficiency where the tentative allowance was ignored in the notice and there is a final determination of the carryback, the ATE or Counsel will provide the total amount of the carryback (loss and/or credits) or the basis to compute such carryback. The "tax per return or as previously adjusted" amount in the settlement computation must include the TC 295 from the tentative allowance. Form 3610 (if prepared) is not modified to include the statement shown in IRM 8.17.5.3.1.

    2. If the starting point for the settlement computation is the statutory notice of deficiency where the tentative allowance was included in the notice and there is a final determination of the carryback, the ATE or Counsel will provide the total amount of the carryback (loss and/or credits) or the basis to compute such carryback. If the allowable carryback is different from the amount included in the notice, an adjustment may be needed to taxable income or credits. Form 3610 (if prepared) is not modified to include the statement shown in IRM 8.17.5.3.1. (Make sure the "tax per return or as previously adjusted" amount in the settlement computation includes the TC 295 from the tentative allowance).

  8. Carryback not allowed by Appeals or Counsel:

    1. If the starting point for the settlement computation is either the return, or the statutory notice of deficiency where the tentative allowance was ignored in the notice, a recapture of the tentative allowance is needed. The "tax per return or as previously adjusted" amount in the settlement computation must include the TC 295 from the tentative allowance. This automatically creates a recapture that is reflected in the bottom line deficiency or overassessment amount of the settlement computation.

    2. If the starting point for the settlement computation is the statutory notice of deficiency where the tentative allowance was included in the notice, an adjustment to taxable income and/or credits 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.) And, the "tax per return or as previously adjusted" amount in the settlement computation must also include the TC 295 from the tentative allowance.

8.4.1.18.2  (10-01-2012)
Other Carryback Claims Allowed in Docketed Settlement Computations

  1. Taxpayers may claim a net operating loss or unused credit carryback on an amended return using Form 1040X (individuals) or Form 1120X (corporations). This is called a claim for credit or refund:

    1. A claim for credit or refund is identified on the account module by TC 291 or TC 299. When this transaction code is present, either a Form 1040X (individual) or Form 1120X (corporation) was filed.

    2. Generally a TC 299 indicates the Form 1040X or Form 1120X was filed to carry back an unused loss or credit. A TC 291 may or may not be the result of the Form 1040X or Form 1120X being filed to carry back an unused loss or credit.

  2. Compliance usually secures Form 1040X or 1120X and places it in the case file along with the return. If the form is not in the case file, the ATE should take steps to secure a copy so an analysis can be made to determine what year the carryback originated and the amount of the carryback allowed.

  3. The TCS should prepare Form 2285, Restricted Interest Worksheet, when other carryback claims are involved. See IRM 8.17.6, Interest Issues in Settlement Computations for additional information.

  4. Further discussion of other carryback claims (Form 1040X or 1120X) is found at IRM 8.17.4.12, Tentative Allowances and Other Carryback Claims In the Notice of Deficiency Statement.

  5. When a carryback is allowed by Appeals or Counsel in a docketed case and the starting point for the settlement computation is the return:

    1. Allow the carryback up to the amount shown for each year on Form 1040X or Form 1120X. Allowance of an additional amount in a tax year should be avoided if there is doubt whether it would create a duplicate allowance for the taxpayer.

    2. The "Tax per return or as previously adjusted" amount in the settlement computation must include the TC 291 or TC 299 generated by the carryback claim.

    3. Decisions of the Tax Court are final so the claim cannot be provisionally allowed. Therefore, the paragraph in IRM 8.17.5.3.1, Settlement Computations with Tentative Allowances and Carryback Claims, is not appropriate to use for these cases.

  6. If the starting point for the settlement computation is the statutory notice of deficiency where the claim for credit or refund was ignored , see discussion below:

    1. 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 the notice was issued or an error made when the notice was prepared that caused the claim to be inadvertently ignored in the notice.

    2. Therefore, when a carryback is 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, allow the carryback up to the amount shown for each year on Form 1040X or Form 1120X. Allowance of an additional amount in a tax year should be avoided if there is doubt whether it would create a duplicate allowance for the taxpayer.

    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.

    4. Decisions of the Tax Court are final so the claim cannot be provisionally allowed. Therefore, the paragraph in IRM 8.17.5.3.1 is not appropriate to use for these cases.

  7. When a carryback is 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, usually no further action is necessary.

    1. However, if the allowable carryback is different from the amount included in the notice, an adjustment may be needed to taxable income or credits.

    2. 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.

    3. Decisions of the Tax Court are final so the claim cannot be provisionally allowed. Therefore, the paragraph in IRM 8.17.5.3.1 is not appropriate to use for these cases.


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